Oil Prices Slip as Saudi Arabia Cuts Prices and China Lockdowns Intensify

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Oil prices declined Monday after Saudi Arabia, the biggest exporter, reduced prices for Asia and the northwest of Europe.

Tighter lockdowns in China to prevent the spread of new Covid-19 outbreaks, as well as signs of a broader global economic slowdown, also weighed on prices.

Brent crude, the international standard, traded down 0.7% at $111.56 a barrel. West Texas Intermediate, the U.S. benchmark, was down 0.9% at $108.79.

Saudi Aramco, the state oil company, reduced prices for sales overseas for the first time in four months. It had raised them to record levels after the Ukraine war threatened supplies from Russia, which also sends large quantities of crude to Europe and Asia.

Shanghai, China’s biggest city, on Sunday made its city-wide lockdown stricter with a goal to eliminate coronavirus infections outside of quarantined areas by the end of the month. The restrictions on movement are denting activity in the world’s second-biggest economy, lowering demand for energy.

Nevertheless, international oil prices are still about $10 a barrel higher than they were a month ago, driven up by the risk that Russia won’t be able to sell as much of its output as it did before the invasion.

The Group of Seven countries said Sunday they were committed to phasing out their use of Russian oil. The U.S. and the U.K. already have banned imports. The show of unity from European nations and Japan, which still relies heavily on Russian fuel, further isolated the country.

A ban on Russian oil by the European Union has been held up by certain demands from Hungary.

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