Traffic in several major cities in China has dropped considerably since the authorities imposed this weekend new regional lockdowns as part of the zero-COVID policy. The decline in traffic in Shanghai and Shenzhen has market participants and analysts concerned about the potential threat to oil demand in the world's largest crude oil importer.
Peak traffic congestion in Shanghai was down by 36 percent on March 15 compared to the same day last year, while traffic jams in Shenzhen were down by 26 percent, Bloomberg reported on Wednesday, citing data from Baidu Inc.
The capital city Beijing, which is not under lockdown currently, has also seen traffic congestion fall significantly, by 25 percent compared to this time last year, according to the data compiled by Bloomberg.
The Chinese zero-COVID policy has been spooking the oil market several times over the past two years as authorities opt for immediate lockdowns of large areas and cities when they see COVID cases spiking.
Such was the case earlier this week, when oil prices crashed, also because China locked down several cities because of a surge in COVID cases.
China locked down all 17.5 million residents in the business hub Shenzhen and limited bus services to Shanghai after COVID cases spiked over the past few days. The entire Jilin province is also under lockdown, while many businesses, including operations of Apple and Toyota, have been affected.
"More widespread lockdowns will weigh on mobility in the coming weeks," according to an Energy Aspects note this week cited by Bloomberg. Energy Aspects reduced its oil demand estimate for China by 170,000 barrels per day (bpd) for the first quarter and by 130,000 bpd for the second quarter.
Chinese independent refiners in the Shandong province have cut run rates further due to the lockdowns, local consultancy JLC said on Wednesday.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More