Oil falls after fuel demand outlook affected by new Covid restrictions in China

Oil prices fell on Tuesday, after the imposition of new restrictions to contain Covid-19 in China and fears of a global economic slowdown affected the outlook for fuel demand.

The price of benchmark Brent crude in September contracts fell by $1.81, or 1.7 percent, to $105.29 a barrel, and West Texas Intermediate crude in August contracts fell 1.95 cents, or 1.9 percent, to $102.14 a barrel.

Several Chinese cities are implementing new restrictions to contain COVID-19, from closing some businesses to completely shutting down to contain new infections with the emergence of the new fast-spreading sub-mutant.

Western sanctions imposed on Russia over its war in Ukraine, which Moscow describes as a “special military operation”, have disrupted commercial flows of crude oil and fuel.

Oil prices also fell as fears of a disruption of the Caspian pipeline consortium eased after a Russian court on Monday overturned an earlier ruling to block the pipeline for 30 days.

But traders and dealers remained afraid of the suspension of the pipeline that transports crude from Kazakhstan through the Black Sea. Its suspension could affect 1 percent of global oil supply.

US President Joe Biden will call on the Organization of the Petroleum Exporting Countries (OPEC) to increase production when he meets Gulf leaders in Saudi Arabia this week.