Oil prices have fallen to levels that don’t fully reflect the risk of disruptions to Russian exports or the ability of China to keep the coronavirus pandemic under control, according to the world’s biggest independent crude trader.

While Brent surged to almost $140 a barrel soon after Russia’s attack on Ukraine in late February, it sunk 13% last week to around $104. That was due to the U.S. announcing an unprecedented release of strategic reserves to tame fuel prices and China implementing more virus lockdowns.

Those developments overshadowed the potential for a drop in oil from Russia over the coming months. Traders, shippers, insurers and bankers are wary of taking on Russian barrels as Western governments isolate and sanction Moscow for its invasion.

“Oil feels cheaper than most would’ve predicted,” Mike Muller, Vitol Group’s head of Asia, said Sunday on a podcast produced by Dubai-based consultant and publisher Gulf Intelligence. “Oil prices could be higher given the risk of disruption of supplies from Russia. But people are still lost figuring out those numbers.”

Flows of Russian crude and oil products may be down by between 1 and 3 million barrels a day through the third quarter, according to Muller. The country normally exports around 7.5 million barrels every day.

Spread in China

China has placed almost all of Shanghai’s 25 million residents under some form of lockdown as the financial hub struggles to contain the omicron variant of the virus. The government has ordered local officials to curtail the outbreak “as soon as possible.”

“I happen to be in the camp that thinks China will continue to suppress this,” Muller said. “The Chinese are certainly making a good fist of arresting it.”

Beijing will probably announce more economic stimulus measures before the Communist Party Congress later this year, Muller said. Such a move would likely bolster demand for oil in the world’s biggest importer.

“China will throw the kitchen sink at making sure the economy delivers,” he said. “We are going to see China put a massive effort into infrastructure spending and propping up the economy. You’re going to see a big outlay.”

Iran Doubts

There’s also less chance of the 2015 nuclear agreement between Iran and world powers being revived in the coming months, according to Muller. A deal would limit Tehran’s atomic activities and lift U.S. sanctions on its energy exports, enabling it to ramp up oil production.

American officials said late last month that a pact wasn’t “imminent,” while Iran has made similar comments. Envoys are yet to say when they’ll return to Vienna for negotiations and many U.S. allies in the Middle East—including Israel and Saudi Arabia—are wary that a revival of the deal would hand Iran an oil windfall and allow it to continue arming proxy groups in the region.

“Everyone was expecting a return of Iranian supplies,” Muller said. Now “nobody believes that’s going to happen in the second quarter. It looks much less likely than it did a few weeks back.”

Geneva-based Vitol traded 7.6 million barrels of crude and oil products last year, and made revenue of $279 billion.