Oil dropped for a second day on Monday, as China's efforts to contain an outbreak of COVID-19 and the Federal Reserve's indication that it could raise interest rates aggressively prompted concerns about demand.
The price of crude oil fell for a second day.
China implemented harsher measures to contain rising COVID cases in the country, which has raised fears of a big hit to demand in the world's biggest energy importer. The financial hub of Shanghai put up fence around some buildings and closed some streets due to fears of a mass testing in Beijing.
Chinese officials have stood by their zero-carbon policy. Whenever clusters emerge, travel restrictions are imposed, with Shanghai locked down since March.
A raft of Fed officials, including Chair Powell last week, have signaled the central bank is likely to raise US interest rates by half a percentage point next month to bring inflation, which is running at its hottest in over 40 years, under control. The Fed is expected to raise rates by 50 basis points at its next three policy meetings and there is a risk that this could hurt economic growth.
The price is set to stay volatile given the worries about falling demand in China and an expected slowdown in the US.
The oil market has been affected by reduced supply. After the invasion, traders stopped buying Russian cargo and the EU decided to cut off Russian energy.
The European Union was planning "smart sanctions" on Russia's oil imports in order to minimize damage to the bloc's economy, the Times reported Monday. Around 25% of the EU's oil and 40% of its natural gas imports come from Russia, and the EU is under pressure to find alternative sources.
Russia's commitment to waging war in the East of the country remains steadfast and there is still some expectation that European countries which are still holding out against a Russian crude embargo may relent in the face of Moscow's continuing aggression.
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