Nov. 28 (UPI) — Crude oil prices charted new lows on Monday amid ongoing concerns about demand in China, where a zero-tolerance policy in COVID-19 led to rare protests against the government and President Xi Jinping.
The price for Brent crude oil, the global benchmark for the price of oil, was down about 1.3% as of 10:10 a.m. EST to trade at $82.62 per barrel, its lowest since Jan. 10. West Texas Intermediate, the U.S. benchmark, was down 1.2% to trade at $75.36 per barrel, its lowest price since December 2021.
Most market analysts had expected oil prices to linger in the triple digits given the potential loss of Russian crude oil due to Western sanctions imposed in response to the war in Ukraine. But high rates of consumer-level inflation and threats of a looming recession have kept a lid on the price of oil for much of the fourth quarter.
Much of the recent concern on demand has focused on China, where a strict, zero-tolerance policy on COVID-19 has shut in major manufacturing centers such as Shanghai.
Phil Flynn, an energy market analyst at The PRICE Futures Group in Chicago, said oil prices have given up all of their gains for the year because of the fear that lockdowns in China, the world’s second-largest economy behind the United States, could usher in a global recession.
“Unprecedented protests and calls for Chinese leader Xi Jinping to step down may back the Chinese government into a corner where they can’t look like there are giving in to protests, thereby slowing down China’s much anticipated reopening,” he said in a research note published Monday.
Dubbed the “White Paper Revolution” because of the use of blank sheets of paper used to symbolize strict censorship laws in China, protests spread beyond Beijing and Shanghai during the weekend in a rare show of defiance against the ruling Communist Party.
The scope and scale of the anti-government demonstrations are larger than any China has seen since the Tiananmen Square pro-democracy protests of 1989.
On the supply side, crude oil prices are reacting to signs that the U.S. government is easing its pressure on Venezuelan President Nicolas Maduro following breakthrough talks with the opposition. U.S. supermajor Chevron received a six-month license to resume limited oil work in the country.
“This action reflects longstanding U.S. policy to provide targeted sanctions relief based on concrete steps that alleviate the suffering of the Venezuelan people and support the restoration of democracy,” the Treasury Department said.
Venezuela was once a major crude oil supplier to the United States before stiff sanctions were imposed on its government. Production in 2016 peaked at around 2 million barrels per day, though aging infrastructure and Western sanctions have limited its potential.
