The Chinese economic capital, which is facing its worst outbreak of Covid-19 in two years, is confined. Or, rather, semi-confined.
The eastern half of Shanghai, where the main airport is located and Pudong, a famous business district with huge and iconic skyscrapers, is closed. Residents are not allowed to leave their homes until 1er April. On this date, it will be the turn of the population of the west of this megalopolis of 25 million inhabitants to be confined.
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So far, the town hall had opted for 48-hour confinements by residential complexes. But the outbreak of contamination linked to the Omicron variant is not weakening. The Ministry of Health reported 3,500 new positive cases in Shanghai on Monday. And the town hall finally opted for more drastic measures for the economy, hoping to overcome new infections “as soon as possible”.
These confinements, which weigh on demand in China, have a significant impact on the price of oil. The price of brent lost more than 6.7%, to 112.48 dollars per barrel, Monday at the close. The other major international reference, the American WTI, for its part yielded more than 6.9%, at 105.96 dollars a barrel. “China’s strict zero Covid policy will continue to result in repeated lockdowns in major business hubs. This may not leave unscathed the demand for oil in China”, summarizes Carsten Fritsch, analyst at Commerzbank.
China’s strict zero Covid policy will continue to result in repeated lockdowns in major business hubs. This may not leave oil demand in China unscathed
Carsten Fritsch, analyst at Commerzbank
In recent weeks, millions of residents have been subjected to lockdowns across the country. This is the case in Shenzhen, in the south of the country, near Hong Kong. After being completely confined at the beginning of March, the technological metropolis is now seeing the end of the tunnel and is resuming its activity. The Organization of the Petroleum Exporting Countries and its allies (OPEC+), which meet on Thursday, will certainly pay particular attention to the Covid situation in China, according to several observers.