Oil prices dip to their lowest level in 2022 as Covid protests in China intensify

Protests against draconian Covid-zero measures have spread in China as frustrations build after three years of pandemic restrictions.

Kevin Frayer/Getty Images

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

Protests against COVID-19 curbs in China spooked the markets early in Asia on Monday, sending US crude-oil prices down to a low not seen this year and Chinese markets tumbling.

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

Authorities have denied the accusations, but the incident triggered anger to spill over in other parts of China as frustrations build after three years of stringent pandemic restrictions.

The fear of unrest in China — and its potential impact on the world's second-largest economy — hit market sentiment, sending oil prices tumbling. China is also one of the world's top oil importers.

Benchmark US West Texas Intermediate crude oil futures were 2.9% lower at $74.09 a barrel at 12.02 a.m. Monday EST — their lowest level this year, while international benchmark Brent crude oil futures tumbled to an 11-month low, trading 2.8% lower at $81.35 a barrel.

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

"Rising unrest in China in the form of protests in several cities has translated to greater reopening pressure for authorities but any indications of reopening seems unlikely to be guided in light of current record high cases," wrote Yeap Jun Rong, a market strategist at online trading platform IG on Monday. 

The Chinese markets could remain volatile in the week ahead, "with any inaction from the authorities to budge from its Covid-19 policy potentially a catalyst for more downbeat mood," he added.

China reported 40,052 new local COVID-19 cases on Monday — 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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