Oil prices abated on Monday, having fluctuated widely last week, with fresh talks between Russia and Ukraine on the horizon.
International benchmark Brent crude was trading at $110.03 per barrel at 0701 GMT for a 2.34% loss after closing the previous session at $112.67 a barrel.
American benchmark West Texas Intermediate (WTI) traded at $106.56 per barrel at the same time for a 2.53% decrease after the previous session closed at $109.33 a barrel.
Fresh talks between Russia and Ukraine, in the hope of bringing an end to the war and easing supply worries, were the largest contributor to Monday’s price slump.
As the war between the two countries drags on, Ukraine's lead negotiator Mikhail Podolyak said negotiations between Ukraine and Russia are scheduled to resume Monday.
Oil prices fluctuated in a highly volatile market last week on the back of ongoing supply fears after the US and UK applied sanctions on Russia. Brent hit over $139 a barrel in intraday trading on March 7, recording a 27.42% increase from the opening price.
“The US ban on Russian crude oil imports saw prices initially rally sharply. However, without the Europeans joining the move, the risk of further tightness in oil markets was discounted,” said ANZ commodity strategist Daniel Hynes.
Randall Mohammed, a financial representative of US-based Northwestern Mutual and energy market commentator said the market has placed a risk premium of $10 to $12 a barrel on oil largely because of the war in Ukraine and the fact that Russia is a top-three producer globally.
“A European sanction on Russian oil would have a far more significant price impact than a ban on imports by the US,” he said.
Supply fears were alleviated after the US started actively searching for alternative oil sources, including from long US-sanctioned Venezuela.
The US is also the largest contributor to the International Energy Agency’s emergency stockpile plan, supplying 30 million barrels.
“Oil prices are predominantly driven by demand and supply fundamentals. Historically, geopolitics account for 1 to 3% and is usually short lived unless it physically impedes the flow to markets,” Mohammed said.
By Sibel Morrow
Anadolu Agency
energy@aa.com.tr