Oil prices tumbled on Thursday, as new Covid-19 lockdown measures in China added to worries that high inflation and interest rate hikes are denting fuel demand.

Brent crude futures fell $2.10, or 2.2%, to $93.54 a barrel by 1013 GMT. U.S. West Texas Intermediate (WTI) crude futures slid $1.86, or 2.1%, to $87.69 a barrel.

“Western-world oil demand, as well as China’s, is stagnant, while supplies are expanding incrementally, largely on the back of the U.S. shale boom,” said Julius Baer analyst Norbert Rucker.

Asia’s factory activity slumped in August as China’s zero-Covid curbs and cost pressures continued to hurt businesses, surveys showed on Thursday, darkening the outlook for the region’s fragile recovery.

Southern Chinese tech hub Shenzhen tightened Covid-19 curbs as cases continued to mount, with large events and indoor entertainment suspended for three days in the city’s most populous district, Baoan.

The main European stocks index fell to seven-week lows on Thursday on deepening worries about aggressive rate hikes and record-high inflation in the region.

A possible revival of a 2015 Iran nuclear deal which would allow the OPEC member to boost its oil exports also weighed on prices.

French President Emmanuel Macron said on Thursday he hoped a deal would be concluded in the coming days.

Recent oil market volatility has followed concerns about inadequate supply in the months after Russia sent military forces into Ukraine and as OPEC struggles to increase output.

OPEC’s output hit 29.6 million barrels per day (bpd) in the most recent month, according to a Reuters survey, while U.S. output rose to 11.82 million bpd in June.

Both are at their highest levels since April 2020.

Still, the oil market will have a small surplus of just 400,000 bpd in 2022, much less than forecast earlier, according to OPEC and its partners – known as OPEC+ – due to underproduction of its members, data from the group showed.

The group expects an oil market deficit of 300,000 bpd in 2023.

Meanwhile, U.S. crude stocks fell by 3.3 million barrels, the U.S. Energy Information Administration said on Wednesday, while gasoline stocks were down 1.2 million barrels.

Finance ministers from the Group of Seven group of wealthy nations will discuss the U.S. Administration’s proposed price cap on Russian oil when they meet on Friday, the White House said.