JAKARTA - World oil prices were observed to fall by 6 percent in late trading Monday (Tuesday morning WIB) along with equities, as the continued COVID-19 lockdown in China, the world's main oil importer, sparked concerns about the outlook for oil demand.
Brent crude futures for delivery in Julia, fell 6.45 dollars, or 5.7 percent, to settle at 105.94 dollars a barrel. US West Texas Intermediate crude futures for June delivery fell 6.68 dollars, or 6.1 percent, to close at 103.09 dollars a barrel.
Both benchmark oil contracts have gained about 35 percent so far this year. Global financial markets are spooked by concerns over rising interest rates and recession fears as China's tighter and wider COVID-19 lockdown leads to slower export growth in the world's number two economy. it was in April.
"The COVID-19 lockdown in China has had a negative impact on the oil market, which was hit by a sell-off along with equities," said Andrew Lipow, president of Lipow Oil Associated in Houston.
China's imports of crude oil in the first four months of 2022 slumped 4.8 percent from a year ago, but April imports rose nearly 7.0 percent. China's imports of Iranian oil in April fell from peak volumes seen in late 2021 and early 2022. as demand from independent refiners weakened after the COVID-19 lockdown hit fuel margins and increased imports of lower priced Russian oil.
Meanwhile, Wall Street's stock indexes fell and the dollar hit a two-decade high, making oil more expensive for holders of other currencies.
Saudi Arabia, the world's top oil exporter, lowered crude prices for Asia and Europe for June.
In Russia, oil production rose in early May from April and production has stabilized, Deputy Prime Minister Alexander Novak said, after production fell in April as Western countries imposed sanctions over the Ukraine crisis.
Last week, the European Commission proposed a gradual embargo on Russian oil, increasing the prices of Brent and WTI for the second week in a row. The proposal requires a unanimous vote by EU members this week to pass.
The European Commission is considering offering landlocked eastern EU countries more money to upgrade oil infrastructure in a bid to convince them to agree, an EU source told Reuters.
"The EU oil embargo will trigger a seismic shift in European and global crude markets, which Rystad Energy expects to see as much as 3.0 million bpd (barrels per day) of EU crude imports from Russia cut by December 2022 in full implementation of the policy. ," said Rystad Energy's head of oil market research Bjornar Tonhaugen.
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