Why did Brent crude prices fall so sharply on Monday from higher levels?

On Monday 28-March, the price of Brent Crude fell by more than $8/bbl to $112/bbl. This was after Brent Crude had bounced back quickly to $120/bbl. The sharp fall in crude prices on Monday was on the back of fears of a hard landing by China. Over the previous weekend, China had announced a major lockdown efforts in the financial hub of Shanghai. The idea was to curb the surge in COVID-19 cases, which had once again reared its head.

The lockdown in Shanghai means that nearly 26 million people are locked into their homes. China is the world’s largest importer of oil in the world. Not surprisingly, oil fell on fears that this could lead to large scale demand destruction as the move in Shanghai could largely impact Chinese oil import volumes. The US is, meanwhile, considering another round of releasing oil from its Strategic Petroleum Reserve (SPR) in Cushing, Oklahoma.