Demand For Oil Falls Further, And The Financial Markets Are Anxious

Oil prices slipped lower in early Asian trade on Tuesday, adding to a 6 percent decline in the previous session, as coronavirus lockdowns in top oil importer China and probable economic turmoil in Europe fueled concerns about the demand outlook.

Brent crude slipped 36 cents, or 0.3%, to $105.58 at 00:09 GMT. West Texas Intermediate crude slipped 23 cents, or 0.2%, to $102.86 a barrel. Earlier in the session, prices fell by more than $1 but have since recovered. Both contracts are up approximately 35% so far this year.

As a result of Russia's invasion of Ukraine, financial markets are heeding fears that a further reduction in oil supplies from Russia could cause economic misery in certain European states.

The European Commission suggested a phased oil embargo against Russia last week, driving up Brent and WTI prices for the second consecutive week. This week, EU members must vote unanimously in favor of the idea for it to pass.

In an interview published on Tuesday, a prominent economist stated that a halt in Russian gas supply to Germany would precipitate a severe recession and cost 500,000 jobs.

Reuters stated that the country's government is covertly drafting an emergency package that could involve taking control of crucial enterprises in the event of an abrupt halt in Russian gas deliveries.

Hungary has reiterated that it will not approve a new round of proposed penalties against Russia until its concerns are addressed.

In April, harsher and broader COVID-19 restrictions in China slowed export development in the world's second-largest economy, China.

In the first four months of 2022, China's crude oil imports decreased by 4.8% compared to the same period in the previous year, while April imports increased by about 7%.

On Monday, Wall Street stock indices declined and the dollar reached its highest level in two decades, making oil more expensive for holders of other currencies.