The OPEC+, which had in October agreed to reduce its output target by 2m barrels per day through 2023, will be meeting on December 4. Image Credit: Reuters

Oil prices slid on Monday, falling close to their lowest level this year, as COVID-19 curbs in China, the world’s biggest crude importer, stoked concern over the outlook for fuel demand.

Brent crude dropped by $1.32, or 1.6 per cent, to trade at $82.31 a barrel at 10:48 a.m. ET (7.48pm UAE time), having slumped more than 3 per cent to $80.61 earlier in the session for its lowest since January 4.

US West Texas Intermediate (WTI) crude slid 75 cents, or 1 per cent, to $75.53 after touching its lowest since December 22 last year at $73.60.

Both benchmarks, which hit 10-month lows last week, have posted three consecutive weekly declines.

Phil Flynn, an analyst at Price Futures Group in Chicago, said oil was paring loses as investors looked ahead to an OPEC+ meeting this weekend.

“Inventories are still near record lows and this probably increases the odds of an OPEC production cut.”

The Organisation of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, will meet on December 4. In October, OPEC+ agreed to reduce its output target by 2 million barrels per day through 2023.

Meanwhile, Group of Seven (G7) and European Union diplomats have been discussing a price cap on Russian oil of between $65 and $70 a barrel, with the aim of limiting revenue for Moscow without disrupting global oil markets.

However, EU governments were split on the level at which to cap Russian oil prices, with the impact being potentially muted.

“Talks will continue on a price cap but it seems it won’t be as strict as first thought, to the point that it may be borderline pointless,” said Craig Erlam, senior markets analyst at OANDA.

“The threat to Russian output from a $70 cap, for example, is minimal given it’s selling around those levels already.”

The price cap is due to come into effect on December 5 when an EU ban on Russian crude also takes effect.