After Russia-Ukraine talks appeared to yield no sign of progress, oil prices jumped even higher, sparking a call by the International Energy Agency to reduce oil demand.
On Monday morning in Asia, crude futures were up more than 3%, with international benchmark crude at $1111.46 and U.S. futures at $108.25.
Oil prices have been volatile in recent weeks, soaring to record highs in March before tumbling more than 20% last week to touch below $100. They rose above that level in the last half of last week.
In a note on Monday, Mizuho Bank said two factors were pushing oil prices higher: Russia-Ukraine uncertainty as well as hopes that China's latest Covid impact could be less dire than anticipated. The key hub of Shenzhen was partially opened on Friday as five districts were allowed to restart work.
Russian and Ukrainian officials have met intermittently for peace talks, which have so far failed to progress to key concessions. Ukrainian President Volodymyr has called for more talks with Moscow.
Zelenskyy told CNN's Fareed that if these attempts fail, this is a third world war.
The rebound in crude oil prices on Friday was due to the breakdown of peace talks between Russia and Ukraine.
The industry’s apparent inability to fill any potential gap has seen calls for consumption to be reduced.Brian Martin and Daniel Hynes
The International Energy Agency called for emergency measures to reduce oil usage on Friday due to tight supply.
The Russia-Ukraine war has led to worries over supply disruptions as a result of U.S. sanctions on Russian oil and gas. Russia supplied as much as 40% of Western European gas consumption in the same period, as the U.K. and European Union said they would phase out Russian fossil fuels.
The EU is considering an oil embargo on Russia as a result of the invasion of Ukraine.
The Commonwealth Bank of Australia warned Monday that oil prices have fallen below recent peaks because markets are still assessing the likelihood of a diplomatic solution to the Ukraine conflict.
The bank's director of energy commodities research said in a note that physical shortages linked to current sanctions on Russia will eventually play a more dominant role in oil price determination.
The industry's apparent inability to fill any potential gap has led to calls for consumption to be reduced.
According to sources, the alliance missed its targets by more than 1 million barrels a day, despite the fact that some producers are still falling short of their supply quota.
Reducing speed limits for vehicles, working from home for up to three days a week, and avoiding air travel were some of the suggestions made by the IEA in a 10-point plan.
The full implementation of these measures in advanced economies alone can cut oil demand by over 2 million barrels a day within the next four months, according to the IEA.
All Rights Reserved © 2024
