Oil prices, which had been soaring as the world considered sanctions on Russian production, fell by more than 7% Monday morning as traders processed the news that China had locked down business hub Shenzhen due to COVID-19 concerns.
The decision signals that China is willing to shut down major urban economies in the pursuit of its zero-COVID policy, as the number of cases climbed to over 10,000. Currently Shenzhen and Shanghai are under lock-down but cases still have to peak in major business center Guangzhou.
Further downward pressure on prices came as talks between the Ukrainian and the Russian governments seemed to be advancing with new rounds of talks planned for Tuesday.
Markets also reacted positively to rising rig counts in the US with the number of active drilling rigs in the United States rising by 13 in the first week of March, indicating that oil producers may be reacting to Biden administration exhortations to up production.