Oil backs off on Ukraine-Russia talks, Chinalockdown resurfaces

Futures in New York closed down 5.8% on Monday, falling below $100 a barrel for the first time since March 1. Brent also shed more than 5%. Ukraine’s negotiator Mykhailo Podoliak said another round of talks between Russian and Ukrainian officials focused on a possible ceasefire, including an immediate withdrawal of troops and security guarantees.

Negotiations between the two countries are driving prices down in the near term as markets are “more sensitive to sentiment than actual supply and demand calculations,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Management.

Meanwhile, risks to global demand have emerged with the resurgence of lockdown measures in China amid a surge in COVID-19 infections. The world’s biggest oil importer placed 17.5 million people under a lockdown in Shenzhen and forbade people to travel in Jilin province, the first time the country has locked down an entire region since April 2020. Oil prices soared after Russia invaded Ukraine. There are fears that the loss of Russian flows could aggravate an already tight market. Rising energy costs have added to inflationary pressures on the global economy, forcing banks to consider a phase of monetary tightening. This week, the Federal Reserve will likely raise interest rates for the first time since 2018, potentially strengthening the dollar and putting pressure on oil prices.

As the humanitarian crisis escalates in heavily bombed areas, there has been a flurry of diplomatic efforts to try and stop the war. A top adviser to Ukraine’s President Volodymyr Zelensky said “continuous” discussions with Russia were underway by video, while Russian President Vladimir Putin held talks with his French and German counterparts after speaking with Zelensky. US Secretary of State Antony Blinken also spoke with the Foreign Minister of Ukraine. Minister

The prospect of additional oil supplies from Iran easing a tight market was dashed on Friday after Tehran and world powers suspended talks to restore the nuclear deal. Russia sought US guarantees that sanctions imposed for its offensive would not affect its planned partnership with the OPEC producer.

Buyers continue to shy away from Russian crude, even as the pace of bringing Iranian barrels back to the market is slow. A consignment of Russia’s major crude oil remained unsold even after traders slashed the price at a record discount. UK lawmakers were told the country may eventually have to ration products such as natural gas and diesel if the crisis continues.

Although Russia has been subjected to stringent sanctions and the US has banned its crude oil imports, the country’s funding has not stopped completely. India is said to be working on a mechanism to facilitate trade using local currencies, while super tankers were still being booked to load Russian oil from Denmark. At least some of the ships would be for cargo that was traded before the invasion.

This story has been published without modification in text from a wire agency feed. Only the title has been changed.