Oil prices plummet to 2022 lows as China Covid protests intensify

  • Crude oil prices plummeted on Monday amid China’s COVID-19 protests.
  • Fears of unrest in the world’s second largest economy hit market sentiment, sending stocks in Hong Kong and China tumbling.
  • China on Monday reported 40,052 new local COVID-19 cases — a daily record high for the fifth straight day.

Protests over COVID-19 restrictions in China spooked markets in Asia early Monday, sending US crude prices to a year-old low and Chinese markets plummeting.

The rare public display of dissent spreading in China over the country’s draconian Covid-zero policy erupted after ten people died in an apartment fire in the Xinjiang region. Some online users blamed Covid restrictions for hampering rescue efforts and blocking escape routes.

Authorities have denied the allegations, but the incident sparked anger in other parts of China as frustrations built after three years of strict pandemic restrictions.

Fears of civil unrest in China – and its potential impact on the world’s second-biggest economy – hit market sentiment and pushed oil prices lower. China is also one of the world’s largest oil importers.

Benchmark US West Texas Intermediate crude futures were down 2.9% at $74.09 a barrel at 12:02 p.m. EST — their lowest this year, while international benchmark Brent crude futures were up fell to an 11-month low and traded 2.8% lower at $81.35 a barrel.

Meanwhile, Hong Kong’s Hang Seng Index fell about 2% at midday, while the Hang Seng China Enterprises Index slipped 2.2%. The Shanghai Composite was down 1% and the Chinese yuan lost about 0.5% against the dollar.

“Increasing unrest in China in the form of protests in several cities has put greater pressure on authorities to reopen, but signs of a reopening appear unlikely given the current record cases,” wrote Yeap Jun Rong, a market strategist at online trading platform IG on Monday.

Chinese markets could remain volatile in the week ahead, “any inaction by the authorities to break away from their Covid-19 policies could be a catalyst for more bearish sentiment,” he added.

China on Monday reported 40,052 new local COVID-19 cases — a daily record high for the fifth straight day, according to the country’s National Health Commission. This number includes asymptomatic cases.

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