The price of oil declined significantly, continuing Friday's fall, and reaching the lowest level since December. The pressure on prices was exerted by protests against Covid controls in China - which further worsened the prospects for energy demand - as well as the strengthening of the US dollar.
Over the weekend, protests broke out in China against strict anti-virus restrictions, which provoked a sell-off in world markets. In addition, a rare demonstration of disobedience increases the threat of government repression. The Chinese authorities are pursuing a so-called zero tolerance policy for coronavirus: entire neighborhoods are blocked in cities, people who have been in contact with infected people are forcibly quarantined, infected people are isolated in hospitals, the country's borders remain virtually closed. However, China won't likely make major changes to its Covid policy in the near future despite this weekend's protests, analysts said. One of the reasons for public unrest was the local implementation of recent central government policy, they said.
Meanwhile, the US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.18% to 106.15. Gains in the US dollar typically make commodities priced in the currency more expensive for importers.
In addition to the situation in China, investors also drew attention to the news that the United States had granted Chevron Corp an extended license allowing it to import oil or petroleum products produced by the company's enterprises in Venezuela. This was done after the Venezuelan authorities and the opposition announced the resumption of consultations.
Meanwhile, EU members cannot yet come to a consensus on how tough the price caps on Russian oil set by the leaders of the G7 should be.