World oil prices dived Monday as Shanghai's phased Covid lockdown reignited fears over Chinese energy demand.
US benchmark West Texas Intermediate oil and Europe's London Brent crude both dropped more than six percent in value.
Stock markets, however, mostly rose, with traders hoping for progress in ceasefire talks between Russia and Ukraine, though gains were tempered by the Shanghai lockdown that also stoked concern over strained supply chains.
"Oil prices started this week trading lower after news of the lockdown in the financial hub of Shanghai shook markets with prospects of further economic slowdowns and supply chain issues," said XTB analyst Walid Koudmani.
"Oil benefited recently from the uncertainty surrounding the Russia-Ukraine conflict and as more countries considered banning Russian imports -- but as many began to price in such an event, attention has turned to recent Covid-19 developments in the world's second economy."
The news impacted the global oil market because China is the world's biggest crude consumer.
Equity markets brushed off the latest lockdown to focus on Ukraine peace hopes.
Shares in London, Frankfurt and Paris were moderately higher in mid afternoon deals, while Wall Street stocks were mixed shortly after opening.
With Russia's Ukraine invasion now in its second month, investors are hoping the two sides will be able to make inroads on ending the crisis when they meet in Turkey, either on Monday or Tuesday.
"European markets have started the week on a positive footing clinging to hopes that a peace deal between Ukraine and Russia could be in sight," said Interactive Investor analyst Victoria Scholar.
Ukrainian President Volodymyr Zelensky said he hoped they would bring peace "without delay", despite several previous rounds failing to overcome disagreements about Kyiv's alignment with the West and Russia's occupation of eastern parts of the country.
But there is a hope that Moscow could be willing to de-escalate as its troops struggle to break dogged resistance from its much smaller opponent.
Zelensky has previously indicated he is "carefully" considering a Russian demand of Ukrainian "neutrality".
Meanwhile, growing expectations that the US Federal Reserve will become increasingly aggressive in its drive to bring down inflation continue to dampen sentiment, with Treasury yields -- a gauge of future interest rates -- surging.
While stock markets have managed to remain resilient in the face of heightened uncertainty, concerns that the Fed will ramp up interest rates continue to cast a pall.