Sharp drop in prices due to fears of falling demand in China

Anti-Covid measures in China, particularly in Shanghai, have led to a sharp fall in oil prices, with Brent 1st-nearby falling from $120/b at the end of last week to below $110/b last night. It has since stabilised at around $111-112/b. The resumption of negotiations between Russia and Ukraine is also contributing to this moderation, although a ceasefire would not fundamentally change things in the sense that Russian oil flows to Europe are likely to decrease anyway. But in the very short term, it would pose fewer logistical problems. 

Kpler yesterday delivered a surprising estimate of oil exports in March: it shows that Russian exports increased the most (+160kb/d)! In fact, Kpler points out that the trend reversed from the middle of the month and this seems to be confirmed by the estimates provided yesterday that they were down by 26% last week compared to the previous week. The other interesting point in Kpler’s figures is that Saudi Arabia’s exports are said to have fallen by almost 500kb/d, suggesting that the Saudi authorities are going beyond refusing to accelerate the OPEC production increase and are probably seeking to put pressure on the Biden administration to resume more cordial diplomatic relations.