Oil Slides on Worries About Lockdowns in China, Release of Reserves

A man climbing a tree looks over barriers, which have been built to separate buildings from a street, amid the coronavirus disease (COVID-19) pandemic in Shanghai, China March 22, 2022. REUTERS/Aly Song
A man climbing a tree looks over barriers, which have been built to separate buildings from a street, amid the coronavirus disease (COVID-19) pandemic in Shanghai, China March 22, 2022. REUTERS/Aly Song
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Oil Slides on Worries About Lockdowns in China, Release of Reserves

A man climbing a tree looks over barriers, which have been built to separate buildings from a street, amid the coronavirus disease (COVID-19) pandemic in Shanghai, China March 22, 2022. REUTERS/Aly Song
A man climbing a tree looks over barriers, which have been built to separate buildings from a street, amid the coronavirus disease (COVID-19) pandemic in Shanghai, China March 22, 2022. REUTERS/Aly Song

Oil prices slid more than $2 a barrel on Monday, following a second straight weekly decline after world consumers announced plans to release a record volume of crude and oil products from strategic stocks and as China lockdowns continued.

Brent crude was down $2.32, or 2.3%, at $100.46 a barrel by 0427 GMT, while US West Texas Intermediate crude lost $2.37, or 2.4%, to $95.89. Last week, Brent dropped 1.5% while US oil slid 1%. For several weeks, the benchmarks have been at their most volatile since June 2020.

The market has been watching developments in China, where authorities have kept Shanghai, a city of 26 million people, locked down under its "zero tolerance" policy for COVID-19.

China is the world's biggest oil importer.

Concerns about China's growth was the main reason for the fall in oil prices today with Shanghai's lockdown showing no signs of being lifted and Guangzhou looking to start mass virus testing, said Jeffrey Halley, senior market analyst at OANDA.

"Fears are rising now that if China's Omicron wave spreads to other cities, its zero-COVID policy will see mass extended lockdowns that negatively impact both industrial output and domestic consumption," Reuters quoted him as saying.

Member nations of the International Energy Agency (IEA) will release 60 million barrels over the next six months, with the United States matching that amount as part of its 180-million-barrel release announced in March. The moves are aimed at offsetting a shortfall in Russian crude after Moscow was hit with heavy sanctions following its invasion of Ukraine.

"We expect these Strategic Petroleum Reserve (SPR) volumes —about 273 million barrels in total and 1.3 million barrels per day (mbd) over the next six months — to go a long way in the short term toward offsetting the 1 mbd of Russian oil supply we expect to remain permanently offline," said JP Morgan analysts in a note.

However, it is unclear whether that will fully offset the shortfall in Russian oil as exports continued, with India, lured by steep discounts, increasing imports.

On Monday, President Joe Biden will meet virtually with Indian Prime Minister Narendra Modi, the White House said, at a time when the United States has made it clear it does not want to see an uptick in Russian energy imports by India.

In the United States, energy firms last week added oil and natural gas rigs for a third week in a row as Washington seeks more production to help its allies wean themselves off Russian oil and gas.



Trump Threatens Canada with 35 Percent Tariff Rate Starting Aug 1

US President Donald J Trump participates in a cabinet meeting in the Cabinet Room of the White House in Washington, DC, USA, 08 July 2025.  EPA/AARON SCHWARTZ / POOL
US President Donald J Trump participates in a cabinet meeting in the Cabinet Room of the White House in Washington, DC, USA, 08 July 2025. EPA/AARON SCHWARTZ / POOL
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Trump Threatens Canada with 35 Percent Tariff Rate Starting Aug 1

US President Donald J Trump participates in a cabinet meeting in the Cabinet Room of the White House in Washington, DC, USA, 08 July 2025.  EPA/AARON SCHWARTZ / POOL
US President Donald J Trump participates in a cabinet meeting in the Cabinet Room of the White House in Washington, DC, USA, 08 July 2025. EPA/AARON SCHWARTZ / POOL

Canada will face a 35 percent tariff on exports to the United States starting August 1, President Donald Trump said Thursday in a letter to Prime Minister Mark Carney.

It was the latest of more than 20 such letters issued by Trump since Monday, as he continues to pursue his trade war threats against dozens of economies.

Canada and the US have been locked in trade negotiations in hopes of reaching a deal by July 21, but the latest threat appeared to have shifted that deadline, AFP said.

Both Canada and Mexico are trying to find ways to satisfy Trump so that the free trade deal uniting the three countries -- known as the USMCA -- can be put back on track.

"Throughout the current trade negotiations with the United States, the Canadian government has steadfastly defended our workers and businesses. We will continue to do so as we work towards the revised deadline of August 1," Carney posted on social media platform X Thursday night.

The United States-Mexico-Canada Agreement replaced the previous NAFTA accord in July 2020, after Trump successfully pushed for a renegotiation during his first term in office.

It was due to be reviewed by July next year, but Trump has thrown the process into disarray by launching his trade wars after he took office in January.

Canadian and Mexican products were initially hard hit by 25 percent US tariffs, with a lower rate for Canadian energy.

Trump targeted both neighbors, saying they did not do enough on illegal immigration and the flow of illicit drugs across borders.

But he eventually announced exemptions for goods entering his country under the USMCA, covering large swaths of products.

The letter on Thursday came despite what had been warming relations between Trump and Carney, who has been faced with his counterpart's regular musings that Canada should become the 51st US state.

Reciprocity

The Canadian leader came to the White House on May 6 and had a cordial meeting with Trump in the Oval Office.

They met again at the G7 summit last month in Canada, where leaders pushed Trump to back away from his punishing trade war.

Canada also agreed to rescind taxes impacting US tech firms that had prompted Trump to retaliate by calling off trade talks.

Separately, Trump announced in an interview with NBC that he was also thinking of slapping blanket tariffs of between 15 and 20 percent on August 1 on countries that had not yet received one of his letters.

The letters announce tariff rates of as much as 50 percent in the case of Brazil to kick in on August 1 unless better terms can be found before then.

Trump told NBC that the letter to the 27-country European Union, the US's biggest trading partner, would be sent "today or tomorrow (Friday)."

Brazilian President Luiz Inácio Lula da Silva said on Thursday that he is willing to negotiate with the United States after Trump said he would hit the country with his tough tariff.

He however reiterated that the Brazilian government is evaluating reciprocity measures.

In his letter addressed to Lula, Trump criticized the treatment of his right-wing ally Jair Bolsonaro.