Wall Street traders saw oil drop more than 7 percent Monday morning as worries over the economy prompted them to trade on Wall Street. new lockdowns in ChinaThe potential effect on demand caused prices to tumble.

West Texas Intermediate crudeFutures, which are the U.S. benchmark oil price, fell 8.89, or 7.8% to trade at $105.01 a barrel by 10:00 AM on Wall Street. International benchmark Brent crudeOil prices were 7.4% higher at $111.61 per barrel

Commerzbank sent Monday a note to its clients stating that today’s price drop is due to “first and foremost concerns about demand”

China is the biggest oil importer in the world, and any decrease in demand for this product will have a negative impact on price. According to Andy Lipow (president of Lipow Oil Associates), the nation consumes around 15 million barrels daily and imports 10.3 million barrels each day by 2021.

“The amount of [the]Lipow stated Monday that the selloff is due to fears of Covid lockdowns spreading in China. This could significantly affect demand, at a moment when oil markets are trying to find alternative sources to Russian oil.

Commerzbank claimed that another round of peace negotiations between Russia and Ukraine is scheduled for this week. This was also a contributing factor to oil’s decline.

Crude has just experienced its first positive week since the previous three. Brent and WTI finished the week 8.79% & 10.28% higher respectively.

Since the invasion of Ukraine by Russia at February’s end, volatility has increased in the oil market. On the anniversary of the invasion, prices rose to $100 per barrel. Brent was almost at $140, and WTI reached $130.

WTI’s price dropped and traded below $100 by March 14. Volatility is partly due the uncertainties surrounding Russia’s oil future.

International Energy Agency warned three million barrels per day of Russian oil outputAs buyers shun oil from the country due to Western sanctions, April could be a dangerous month. However, analysts note that Russian oil continues to find buyers. especially from India.

Traders believe that the volatility is also due to non-energy market participants who use crude oil as an inflation hedge. Open interest has declined in recent weeks making it more susceptible to larger intraday swings.

Despite Monday’s drop, oil remained at $100

Monday’s statement by TD Securities stated that Brent crude oil will still rally, as long as the market prices in a rise of energy supply risk and huge supply disruptions.

The right tail of energy markets’ is fat but not too much. According to the firm, “The setup is still suitable for higher prices of energy.”