Chinese Zero-COVID protests see sharp drop in oil price

Protests in China over the government’s strict zero-COVID policy have seen the price of Brent crude drop to its lowest since the beginning of the year.

Over the weekend, demonstrators clashed with police in Shanghai and other parts of China amid protests over stringent rules.

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This wave of civil disobedience is unprecedented in mainland China since Xi Jinping became president over a decade ago, as tensions and frustrations over his zero-COVID policy continue to mount nearly three years into the pandemic.

The situation has already had an impact on the global economy, with the price of Brent crude falling by nearly 3% in Asian trade on Monday morning.

This saw it brought down to around 81 dollars a barrel, fuelling concerns over the weakening demand in the world’s top oil importer.

Sparing a cut in production or America buying more oil in order to replenish its strategic reserves, oil prices are expected to stay lower. 

Concerns about Chinese economic growth also hit commodities in Asian trade, while US crude dipped by 2.81% to 74.14 dollars per barrel.

The COVID rules and resulting protests are creating fears that the economic hit for China will be greater than expected.

“Even if China is on a path to eventually move away from its zero-COVID approach, the low level of vaccination among the elderly means the exit is likely to be slow and possibly disorderly,” CBA analysts said on Monday.

“The economic impacts are unlikely to be small.”

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Picture: Murray Swart/ Cape{town}Etc

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