Crude oil extended loss in Asian hours after sliding 7% on Monday on growing concerns that curbs in China would weigh on global demand and as Ukraine and Russia headed for peace talks.
Crude oil futures in New York dropped 0.93% to around $104 a barrel while Brent is trading around $111 a barrel.
Demand outlook for crude oil snaps as China is coping with its worst outbreak since Wuhan more than two years ago at the start of the pandemic.
Shanghai is the latest Chinese city to be caught up in the outbreak. Rystad Energy estimated a staggered lockdown across the financial center could potentially reduce oil demand by as much as 200,000 barrels a day for the duration of the restrictions.
Meanwhile, the OPEC+ alliance is expected to meet on Thursday to discuss its supply policy for May and the group signaled it will stick to its existing policy and will ratify an increase of 430,000 barrel a day.
On the Russian-Ukraine war front, both parties are set to meet in Istanbul on Tuesday for the first peace talk in over two weeks.
Russia calls its actions in Ukraine a “special operation” to disarm its neighbour.
“Oil prices are under pressure again on expectations for a peace talk between Ukraine and Russia, which could lead to an easing of sanctions or avoidance on Russian oil by the West,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities, as reported by Reuters.
“A successful ceasefire could also raise the prospect of reviving an Iranian nuclear deal,” he added.