As fears of demand decrease due to the Shanghai lockdown, oil experiences a decline of over 8%.

• On Monday, the price of oil decreased by more than 8% due to concerns about a slowdown in demand resulting from new lockdowns in Shanghai.
• Commerzbank stated that the decline in today's prices is primarily due to worries about demand, as Shanghai has implemented a partial lockdown.
• China is the world’s largest oil importer.
• Another round of peace talks between Russia and Ukraine also weighed on prices.

On Monday, the price of oil dropped more than 8% at its lowest point due to worries about new lockdowns in China and their possible effect on demand, causing prices to plummet.

The U.S. oil benchmark, futures, fell 8.25% to $104.50 per barrel, while the international benchmark traded 7.4% lower at $111.61 per barrel.

During afternoon trading on Wall Street, both contracts experienced losses. WTI finished the day at $105.96, down about 7%, while Brent settled at $112.48 per barrel, a 6.77% decline.

According to Commerzbank, concerns about demand in Shanghai, which has entered a partial lockdown, are the primary reason for today's price slide.

Any decrease in China's oil demand will negatively affect prices, as the country imports approximately 10.3 million barrels per day, which accounts for around 15% of the world's total oil imports.

The sell-off's magnitude reflects fears that Covid lockdowns in China could spread, significantly impacting on demand at a time when the oil market is trying to find alternatives to Russian oil supplies, Lipow said Monday.

This week, another round of peace talks between Ukraine and Russia is scheduled, and Commerzbank stated that this is also contributing to the decline in oil prices.

In the past three weeks, crude has had its first positive week, with WTI and Brent ending the week up 8.79% and 10.28%, respectively.

Since Russia's invasion of Ukraine in late February, the oil market has experienced increased volatility, with prices surging above $100 per barrel on the day of the invasion and continuing to rise. WTI reached its highest level since 2008 at $130, while Brent almost hit $140.

The price of oil didn't remain stable, and on March 14 WTI fell below $100. The fluctuating behavior is due, in part, to the uncertainty surrounding the future of Russia's oil.

Western sanctions are causing buyers to avoid Russian oil, but analysts have observed that India is still purchasing Russian oil.

The recent volatility in the crude oil market is attributed to non-energy market participants using it as an inflation hedge, according to traders. As open interest has decreased in recent weeks, the market has become more vulnerable to larger intraday swings.

Despite Monday’s slide, oil held above $100.

TD Securities predicts that Brent crude will continue to rise as the market prices in increased energy supply risk due to significant supply disruptions, they stated on Monday.

"Higher energy prices are still a possibility in the market, as the right tail remains fat," the firm stated.