![\"\"](\"https:\/\/www.ghanamma.com\/wp-content\/uploads\/2022\/03\/Shangai-Covid-696x392.jpg\" "\\"Shangai")
<\/div>\nGlobal oil prices have fallen as China starts to implement a city-wide lockdown in Shanghai, an important financial and manufacturing hub.<\/p>\n
Brent crude lost more than $4.50 a barrel on concerns that the move would mean that demand for oil will fall.<\/p>\n
The Shanghai Composite stock index fell in early trade before regaining most of the losses later in the day.<\/p>\n
The lockdown, which began on Monday, is China\u2019s largest since the coronavirus outbreak began more than two years ago.<\/p>\n
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The futures contract for Brent crude \u2013 an international benchmark for oil prices \u2013 was down by 4% at $115.80 a barrel.<\/p>\n
Despite the fall, oil remains almost 80% higher than it was a year ago after the war in Ukraine helped to drive up prices.<\/p>\n
Traders were concerned about the effectiveness of China\u2019s zero-tolerance policy towards Covid, said Stephen Innes, managing partner at SPI Asset Management.<\/p>\n
Mr Innes also said in a note to investors that there were expectations of further supply chain disruptions as well as a fall in demand.<\/p>\n
\u201cWe might be only dealing with the tip of the iceberg,\u201d he said.<\/p>\n
However, Dan Wang, chief economist at Hang Seng Bank China, does not expect the lockdown to have a major impact on supply chains.<\/p>\n
Most factories continue to operate as usual, and workers are either being confined on-site or given priority for testing, the Shanghai-based economist told the BBC.<\/p>\n
\u201cThe suburbs are controlled quite well and quite tightly,\u201d she said. \u201cSupply chain stability is a priority in this round.\u201d<\/p>\n
She added that, given the spike in Covid cases, there were expectations of more government stimulus and interest rates could be lowered \u201cquite significantly\u201d in the coming days.<\/p>\n
As long as they are passed on by banks, lower interest rates make it less costly for businesses and individuals to borrow money.<\/p>\n
Meanwhile, the Shanghai Composite stock index opened lower on Monday before regaining those losses to close just 0.07% higher.<\/p>\n
Until now, Chinese authorities had resisted locking down the city of almost 25 million people to avoid destabilising the world\u2019s second largest economy.<\/p>\n
The city will be locked down in two stages over nine days while authorities carry out Covid-19 testing.<\/p>\n
The key financial centre has battled a new wave of infections for nearly a month, although case numbers are not high by some international standards.<\/p>\n
It comes after\u00a0lockdowns in China affected tens of millions of people across the country earlier this month, including the entire Jilin province and the technology hub of Shenzhen.<\/p>\n
Shanghai\u2019s public transport has been suspended and firms and factories in the city have been ordered to halt operations or work remotely.<\/p>\n
The lockdown will take place in two stages, starting on Monday with the eastern side of Shanghai, which includes the city\u2019s financial centre.<\/p>\n
From Friday, the western side of Shanghai is scheduled to go into lockdown.<\/p>\n
This staggered approach means that half of the city will be able to remain open.<\/p>\n
Some businesses had already stopped operating in Shanghai, which has been battling a new wave of Covid infections for nearly a month.<\/p>\n
Last week, the Shanghai Disney Resort said it would close until further notice, citing the \u201ccurrent pandemic situation\u201d.<\/p>\n
\u201cWe will continue to monitor the pandemic situation and consult local authorities, and will notify guests as soon as we have a confirmed date to resume operations,\u201d it said.<\/p>\n
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