(Reuters) On Monday, oil prices fell more than 3% to their lowest since December 2021, as protests in China, the largest oil importer, over tough COVID-19 restrictions fueled concerns about demand.
Brent crude for January delivery fell 3.2%, or about $2.66, to $80.97 a barrel.
US crude for January delivery also fell by 3.16%, or $2.41, to $73.87 a barrel, after recording earlier during today’s trading $73.82, the lowest since December 27, 2021.
Both benchmarks, which hit 10-month lows last week, posted three straight weekly declines. Brent ended the last week down 4.6 percent, while West Texas Intermediate crude fell 4.7 percent.
"In addition to growing concerns about weak fuel demand in China due to an increase in COVID-19 infections, political uncertainty stemming from rare protests over the government's strict COVID-19 restrictions in Shanghai sparked a sell-off," said Hiroyuki Kikukawa, general manager of research at Nissan Securities. .
He added that the WTI trading range is expected to drop to between $70 and $75. He said the market could remain volatile depending on the outcome of the OPEC+ meeting and the Russian oil price cap.
China, the world's largest oil importer, has adhered to President Xi Jinping's zero-COVID policy even as much of the world has lifted most restrictions.
Hundreds of demonstrators and police clashed in Shanghai on Sunday evening, after protests against China's strict coronavirus restrictions broke out for a third day and spread to several cities following a fire that killed people in the country's far west.
Mainland China has not seen such a wave of civil disobedience since Xi came to power ten years ago, with frustration mounting over his zero-COVID policy after the outbreak of the pandemic nearly three years ago.
At the same time, diplomats from the G7 and the European Union have discussed capping the price of Russian oil between $65 and $70 a barrel with the aim of limiting revenues to fund Moscow's military offensive in Ukraine without disrupting global oil markets.
But EU diplomats said a meeting of EU government representatives, which was scheduled for the evening of November 25 to discuss the issue, had been cancelled. The Russian oil price cap is set to take effect on Dec. 5, when the European Union's embargo on Russian crude begins.
Investors are also focusing on the upcoming meeting of OPEC +, which includes the Organization of the Petroleum Exporting Countries and its allies, on December 4.
OPEC+ agreed in October to reduce its production target of two million barrels per day until 2023.