Oil Prices Rise As China Relaxes Covid Restriction
Global oil prices went higher last weekend, by more than 2.5% in early trade in Europe, as China announced on Friday the easing of its strict Covid measures that have weighed on the oil market in recent months.
With the new reviews on Covid management, China is now shortening the quarantine for travelers to eight from 10 days.
Also, inbound travelers will now have to stay at a hotel or a government quarantine facility for five days – instead of seven under the previous rules – and then another three days in quarantine at home.
China has equally scrapped the controversial penalty for airlines that bring in infected passengers and will no longer trace close contacts of close contacts of people who have tested positive for Covid.
Chinese authorities had announced that quarantine times would be reduced for inbound passengers and close contacts of Covid-infected people while close contacts of close contacts would no longer be traced.
The new guidelines from China’s National Health Commission mark the first significant easing of the Chinese ‘zero-Covid’ policy, which has weighed on economic activity and fuel demand in the world’s top oil importer this year and has depressed the oil market.
The global market responded positively to China’s move, cheering the easing of the Chinese Covid rules and both benchmarks jumped by more than 2% after the news broke.
The first major easing of the “zero Covid” policies in China since the start of the pandemic in early 2020 signals that the authorities may cautiously proceed with a further gradual easing of the rules, which is set to boost economic activity and oil demand.
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The fact that the policy easing comes during the week in which China registered the highest nationwide new Covid cases in six months also suggests that Beijing may have started to realize that the draconian measures have isolated China and dragged down its economic growth.