The price of oil and other key industrial commodities slid Monday after Chinese government measures to halt the spread of the Delta variant spooked investors about global energy demand.

Brent crude oil, the global benchmark, fell 4% to $67.87 a barrel and West Texas Intermediate futures—the main U.S. benchmark—were down 4.3% at $65.38 a barrel. At those prices, both gauges were set for their lowest close in around 2½ months.

The spread of Delta variant Covid-19 cases has raised alarms in China and other East Asian countries. Beijing health authorities said last week that the city would cancel all large-scale exhibitions and events for the remainder of August.

China is the world’s biggest importer of oil and “while some countries seem to be flipping to learning to live with the coronavirus, it is adopting a zero-tolerance policy” with stricter travel rules and quarantine measures, said Norbert Rücker, head of economics at Swiss private bank Julius Baer.

Customs data showing that China imported less crude per day in July than in June were also weighing on prices, according to analysts at Dutch bank ING. Softening economic data out of Beijing also prompted Goldman Sachs to downgrade its 2021 Chinese economic growth forecast to 8.3% from 8.6%, while Morgan Stanley cut its forecast to 8.2% from 8.7%.

Worries about the economic impact of China’s measures were felt across commodities markets, with metals prices also heading lower. Copper futures, often seen as a bellwether for global economic growth, were down 1.2% at $9,354 a metric ton on the London Metal Exchange. The prices of aluminum and nickel also fell.

If sustained, lower oil and commodity prices would ease pressure on businesses and consumers, who have had to grapple with the highest price rises in a decade. It could also make it less likely that central bankers will tighten monetary policy, since oil prices are often a key short-term driver of consumer price inflation.

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Though crude oil prices are down 10% from a month ago, the drop has yet to feed through at the pump. Gas prices broke above $3 a gallon for the first time in more than six years in May and have remained at those levels ever since. The most recent average U.S. gas price was $3.19 a gallon, according to the American Automobile Association.

Still, analysts said that the oil market’s tight supply and demand balance of recent months was showing few signs of dramatic change, but traders were growing nervous about how oil markets will cope with the next stage in the Covid-19 recovery.

The jitters come at the same time as the Organization of the Petroleum Exporting Countries and its allies press ahead with plans to raise oil production.

While analysts expect oil demand to still outstrip supply even with those extra barrels, OPEC has often reacted to sharp drops in oil prices since the beginning of the pandemic and may do so again to put a floor under prices should Monday’s losses accelerate, said Ole Hansen, head of commodity strategy at London-based Saxo Bank.

In addition to fears about oil demand and rising supply, a stronger dollar also put pressure on oil prices Monday, Mr. Hansen said. Dollar-denominated commodities such as oil become more expensive for other currency holders when the U.S. currency rises, and both the dollar and U.S. Treasury yields climbed after strong U.S. jobs data on Friday.

Major energy companies bore the brunt of falling oil prices, with BP and Royal Dutch Shell shares both lower Monday. But the declines come after an earnings season in which big oil companies have reported bumper profits and said they plan to spend sparingly on boosting production.

Saudi Arabian Oil Co.—known as Aramco—on Sunday became the latest oil major to announce quarterly results. Its profits surged thanks to what the company’s chief executive, Amin Nasser, called a “strong rebound in worldwide energy demand.”

Aramco is working to increase its maximum sustainable production capacity from 12 million barrels a day to 13 million barrels a day, Mr. Nasser said Sunday. That may raise eyebrows in Moscow, with oil production and selling prices at the heart of the market-share race between Saudi Arabia and Russia that crashed oil prices when the pandemic first hit last spring.

One sign that the oil market is weakening is the difference between the price of futures contracts expiring shortly and those farther in the future. Known in the industry argot as “backwardation,” the spread has narrowed in recent weeks.

August represents the summer peak of oil demand as consumers power up their air conditioners and travel on vacation, said Helge André Martinsen, senior oil market analyst at DNB Markets, which could help explain the weakness in crude markets.

“If you add the Delta variant and more barrels from OPEC on top of that, the market is going to weaken but we’ll still be in undersupply,” Mr. Martinsen added.

Investors will be watching for several data points this week, including U.S. crude inventory data on Tuesday and Wednesday—after last week’s official data showed a surprise build in oil stocks—and monthly oil market reports due out from both OPEC and the International Energy Agency on Thursday.

Write to David Hodari at David.Hodari@dowjones.com