China partially closed one of their biggest and busiest cargo ports globally. Ningbo-Zhoushan, after an employee tested positive for Covid-19. Services were paused until further notice—the Meidong Terminal process 25% of the cargo that passes to Ningbo-Zhoushan.
According to the World Shipping Council, the port can handle roughly 27.49 million twenty-foot equivalent units (TEUs) of container volume.
The closure results in global supply chain disruptions, with many shipments due ahead of the Christmas season. The port’s container capacity is also restricted as it cannot take in any more cargo.
Shipping costs from China and South-East Asia to the East coast of the U.S. are already high, with the U.K. businesses already feeling the pinch of higher shipping costs.
Another port in Shenzhen, Yantian, had to close for a month in May after a worker tested positive for Covid-19.
China has been re-instating lockdown restrictions since the Delta variant spread rapidly.
Oil prices fall
The IEA (International Energy Agency) stated that the oil demand recovery has reversed amid the coronavirus resurgence. They downgraded growth in the second half due to the new restrictions. Impacting major oil-consuming countries, particularly China, the world’s leading oil consumer. Now, the port closure and lockdowns have limited mobility, and oil usage declined.
Brent futures fell by 0.7%, trading at $70.82, while crude futures decreased by 0.9% to $68.50.
However, OPEC expects a solid recovery in world demand from 2021 to 2022. The U.S. requested OPEC to increase oil production to decrease high gasoline prices.
Oil has been declining since it reached its pre-pandemic highs in July, demand was slowed down, and U.S. stockpiles increased. In addition, U.S. oil production has been slower in July due to raw materials shortages. The U.S. and China PMI were also down, which crippled the price further, indicating consumers spent more on services.
OPEC’s target is to increase production by 400,000 barrels per day to increase supply.
Recent attacks on oil cargo ships in the Gulf of Oman, U.S. and China’s slower demand, and now the closure of a major port is skewing the oil supply and demand. MetaNews to update the latest news further.