Oil prices, on Tuesday, dropped slightly to $112 a barrel as factories in Shanghai prepared to reopen after a COVID-19 shutdown.
Brent crude futures, the global oil benchmark, fell 0.77 per cent to $112.5 a barrel at 10.07 GMT+1.
West Texas Intermediate crude futures also fell 0.93 per cent to $107.76 a barrel.
The development is coming despite moves by China, the world’s largest oil importer, to reopen manufacturing plants in Shanghai — amid China’s worst outbreak since the start of the COVID-19 pandemic in Wuhan.
Oil prices, however, are still vulnerable to demand shocks as China continues to impose tough COVID-related curbs.
“For oil prices to take off on a sustainable trajectory, reopening mainland cities is necessary for translating into a sustainable economic rebound that supports oil demand,” Stephen Innes, managing director, told Reuters.
Jeffrey Halley, an Oando analyst, noted that markets in Asia seemed content to adopt a wait-and-see approach, reluctant to chase rallying prices any higher.
“China’s growth concerns are capping gains,” Halley added.
On Monday, Libya’s national oil corporation had said “a painful wave of closures” started hitting its facilities, declaring force majeure at Al-Sharara oilfield and other sites.
Nigeria, an oil-rich country, is supposed to benefit from high oil prices if it shored up its export capacity.
However, oil theft and supply disruptions have kept its production capacity down.
In March, oil output droppedto an average of 1.24 million barrels per day (bpd) from 1.25 million in February 2022.
It has affected the country’s ability to wade in as a potential supply for Europe’s energy needs.
Recently, the countrydropped its oil benchmark to 1.6 million from 1.8 millionbpd in the face of current global challenges.