Image source, ReutersThe price of oil has fallen as China starts to implement a city-wide lock-down in Shanghai, an important financial and manufacturing hub.
Concerns that the move would mean that demand for oil will fall led to the loss of more than $3 a barrel.
After falling in early trade, the stock index regained most of its losses later in the morning.
China is the largest country since the coronaviruses outbreak began more than two years ago.
Chinese authorities had resisted locking down the city to avoid destabilizing the world's second largest economy.
The city will be locked down for nine days while Covid-19 testing is carried out.
The key financial centre has battled a new wave of infections for nearly a month, although case numbers are not high by international standards.
The futures contract for oil was down by 2.8% in late morning trade.
Stephen Innes, managing partner at SPI Asset Management, said that traders were concerned about the effectiveness of China's zero-tolerance policy towards Covid.
Mr Innes said in a note to investors that there were expectations of a fall in demand and more supply chain disruptions.
He said that they might be only dealing with the tip of the bigger picture.
The stock index opened lower on Monday but recovered to trade down by just 0.13% at lunchtime.
Firms and factories in the city have been told to stop working or not work at all.
The financial centre of the city is included in the first stage of the lockdown.
The western side of the city is going to be locked down from Friday.
Half of the city will be able to stay open.
Some businesses have stopped operating in the city because of the Covid infections.
The Disney Resort in China said last week that it would close until further notice because of the swine flu.
We will keep an eye on the situation and inform guests when we have a confirmed date to resume operations.
The financial capital of China is now a divided city.
Everyone east of the main river is locked down. Mass testing has begun.
The western half of the city will be closed by the end of the month.
The city is being sealed off. Anyone leaving has to show a negative test.
It is part of a huge effort to stop the spread of a virus that China's leaders thought had been eradicated.
Anyone who tests positive is sent to the hospital.
As the numbers continue to rise, the insistence on a zero-covid strategy is being tested.
All Rights Reserved © 2024
