Oil prices decrease by 3 percent Monday morning following the announcement of a nine-day shutdown of Shanghai, fueling concerns of a drop in China’s oil demand, writes Reuters.

A barrel of European reference crude Brent costs USD 117.16 Monday morning against USD 119.59 Friday afternoon. At the same time the US counterpart West Texas Intermediate trades at USD 110.23 against USD 113.10 Friday afternoon.

The oil market thus kicks off a new week of uncertainty, on the one hand spurred by the ongoing war between Ukraine and Russia – the world’s second-largest exporter of crude – and the growing Covid-19-related lockdowns in China – the world’s largest oil importer.

With a population of 26 million people, Shanghai has launched a rapid response to get a handle on the rising cases of Covid-19.

The Shanghai authorities have announced that the financial districts and industrial areas will be in lockdown mode from Monday and four days ahead, at which point the restrictions will shift to the western part of town for four days.

”Shanghai’s lockdown prompted a fresh sell-off from disappointed investors as they expected such a lockdown would be avoided,” says chief analyst at Fujitomi Securities Kazuhiko Saito to Reuters:

”Still, as OPEC+ is less likely to raise oil output at a faster pace than the recent months, we expect the oil market to turn bullish again later this week.”

According to Reuters, the US is considering another release of oil reserves to help ease tight supply.

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