Oil prices cools down on Russia-Ukraine talk hopes, China lockdowns

• WTI futures dropped 8.2%, Brent fell 4.5%

• Ukraine Russia did not announce any new progress of diplomatic talk

Oil prices slid on Monday to the lowest in about two weeks as Ukraine and Russia held the fourth diplomatic talk.

Investors are hoping that the diplomatic efforts can progress toward an end to Russia’s invasion of Ukraine, which can boost global supplies.

However, China’s pandemic-linked lockdown and travel ban are casting doubt on demand.

Global oil benchmark, Brent crude May contract fell $4.91, or 4.5%, to settle at $104.73 a barrel, the lowest since March 1.

U.S. West Texas Intermediate (WTI) crude April contract fell $8.94, or 8.2%, to settle at $100.59, the lowest since February 28.

Both the oil benchmarks have surged since Russia’s invaded Ukraine on February 24, jumping around 36% in 2022 alone, and have logged their most volatile 30 days since June 2020.

Diplomatic talks

Although Russian and Ukrainian delegations held the fourth round of talks on Monday via video link rather than in person, the two countries did not announce any new progress.

Ukraine said it held the talks with Russia on a ceasefire, immediate withdrawal of troops and security guarantees.

ALSO READ: US-China bilateral talks take place amid Russia-Ukraine war

The negotiations wrapped later in the day, and they were expected to start up again Tuesday.

The two countries were unsuccessful in making any progress in halting the war on Thursday, the first high-level talks between the foreign ministers since the war.

In the meeting, Ukrainian Foreign Minister Dmytro Kuleba said Russian counterpart Sergei Lavrov indicated that it will continue with attacks until its goals are met.

“The broad narrative he conveyed to me is that they will continue their aggression until Ukraine meets their demands, and the least of these demands is surrender,” Kuleba said in the press conference.

Assessing global oil demand

A renewed COVID-19 outbreak in China is expected to reduce global energy demand since the nation is the world’s largest importer of oil, liquefied natural gas (LNG) and coal.

ALSO READ: Biden calls for revocation of Russia's permanent normal trade status

Jilin, a northeastern Chinese province, imposed a rare travel ban, prohibiting inter-province and international travel and across different areas within the region due to an Omicron outbreak.

The southern city of Shenzhen, China’s most developed large city and economic powerhouse, also announced lockdown for at least a week until March 20.

The U.S. has banned Russian oil imports last Tuesday, and Britain said it would phase them out by the end of 2022.

Russia is the world’s top exporter of crude and oil products, shipping about 7 million barrels per day or 7% of global supplies.

Picture Credit: CNBC