Oil down over demand woes as China goes under fresh lockdowns

By Sibel Morrow

ANKARA (AA) - Oil prices decreased on Friday over a fresh lockdown announced by China as part of the country's zero-COVID policy, with both benchmarks still at their 3-month high.

International benchmark Brent crude was trading at $122.45 per barrel at 0705GMT for a 0.50% decrease after closing the previous session at $123.07 a barrel.

American benchmark West Texas Intermediate (WTI) was at $120.91 per barrel at the same time for a 0.49% loss after the previous session closed at $121.51 a barrel.

Exerting downward pressure on prices, Chinese authorities on Thursday decided to impose a two-day lockdown in Shanghai's Minhang district and announced a round of mass testing for millions of residents.

Andy Laven, chief operating officer of Sahara Group, warned in his daily energy markets review for Gulf Intelligence Consultancy firm about a demand and supply disruption over China's lockdown decision.

"Since May 2020, the oil price trend has been going up. The world has been living in a very low interest rate environment for a long, long time, and it needs a healthy dose of high rates to get a bit of reality back into businesses. The question is, how quickly do we get there and that's the balance between the issues of recession versus politics. But for now, pent up demand will keep people spending even if things are getting more costly," he added.

Despite COVID-19 lockdowns and a sluggish economy weighing on fuel consumption last month, China's crude oil imports surged roughly 12% in May from a low base a year earlier, easing demand concerns.

However, prices were supported as summer gasoline consumption peaks in the US as the driving season has begun in the country on June 1.