Oil prices go down because China is putting limits on COVID and because interest rates might go up.

12 September 2022, 9:17 a.m. Singapore time: Oil prices fell on Monday as COVID-19 restrictions in China and the possibility of more interest rate hikes in the United States and Europe made forecasting how much fuel the world would require difficult.

Brent crude futures fell $1.28, or 1.4%, to $91.56 a barrel at 3:30 GMT on Monday. On Friday, they closed 4.1% higher. The price of a barrel of U.S. West Texas Intermediate crude was down $1.34, or 1.5%, to $85.45, after going up 3.9% the day before.

Brent crude futures dropped $1.28.

Prices didn’t change much last week because the Organization of Petroleum Exporting Countries (OPEC) and its allies, like Russia, cut production by a small amount, but China, which buys the most crude oil in the world, kept its ports closed.

Related: Oil prices rose on the likelihood of OPEC production cuts and rising demand.

This year could be the first time in 20 years that China’s oil demand goes down. This is because Beijing’s zero-COVID policy keeps people at home on holidays, which cuts fuel use.

Jun Rong Yeap, a market strategist at IG, said that there could still be some doubts about a more sustained rise because of China’s new restrictions on viruses and the fact that the global economy is slowing down even more.

“The negatives seem to outweigh the positives overall,” said Yeap, adding that Brent crude prices could be headed toward $85 per barrel.

The European Central Bank and the Federal Reserve are both ready to raise interest rates even more to fight inflation. This could raise the value of the U.S. dollar against other currencies and make it more expensive for investors to buy oil priced in dollars.

Vivek Dhar, an analyst at the Commonwealth Bank of Australia, said in a note that people were worried about the effect of rising interest rates to fight inflation and China’s COVID-zero policy.

Still, oil prices may go up again by the end of the year because a ban on Russian oil by the European Union will go into effect on December 5. This will make the supply even tighter.

Related: Oil prices climb amid indications that OPEC may reduce supply. 

After Russia invaded Ukraine in February, the G7 will put a price cap on Russian oil to stop Russia from making a lot of money from oil exports. They will also take steps to make sure that oil can still flow to developing countries. Moscow calls what it is doing in Ukraine an “operation.”