Al Jazeera :
Oil dropped more than $2 on Monday as a flare-up in COVID-19 cases in Beijing dented hopes of a pick-up in Chinese demand, while worries about more interest rate hikes to control rampant inflation have added further pressure.
West Texas Intermediate futures fell nearly 2 percent to trade below $119 a barrel amid a broader market selloff.
US inflation accelerated to a new 40-year high last month, raising the likelihood of more aggressive interest-rate hikes from the Federal Reserve.
China is starting to re-impose virus curbs as cases rise, just weeks after major easing in key cities such as Shanghai. Beijing’s most populous district Chaoyang announced three rounds of mass testing to quell a “ferocious” COVID-19 outbreak.
“The present price fall is exacerbated by warnings of a ‘ferocious’ spread of the COVID virus in Beijing by officials, casting doubt on immediate demand recovery,” said Tamas Varga of oil broker PVM.
Oil has surged in 2022 as Russia’s invasion of Ukraine compounded supply concerns and as oil demand recovered from COVID lockdowns. Brent hit $139, the highest since 2008, in March, and both oil benchmarks rose more than 1 percent last week. The war has fanned inflation, driving up the cost of everything from food to fuel. US retail gasoline prices have repeatedly broken records and recently hit $5 a gallon.
