Oil prices remained steady on Monday against the expected drop in demand due to mass testing for Covid-19 in China. The market was shaken earlier in the session due to news of discovery of a highly transmissible Omicron subvariant in Shanghai. This was expected to lead another round of mass testing which would hurt fuel demand.
Also putting on pressure on oil is the rise in the U.S dollar as compared to other currencies. This reduces demand for oil as fuel becomes more expensive for buyers using other currencies.
The market is also jittery due to plans by Western nations to cap Russian oil prices. Russian President Vladmir Putin has warned that further sanctions would be catastrophic for the global energy market.
JP Morgan said that the market was caught between two scenarios – a potential halt to Russian supplies and the possibility of recession.
Oil supply has been so far flowing from Kazakhstan via the Caspian Pipeline Consortium (CPC) which carries about 1% of global oil.
