Oil prices dipped by more than 5% early on Tuesday, with the U.S. benchmark WTI slumping to just below $100 a barrel after signs emerged that the resumption of the Russia-Ukraine peace talks after two weeks may have been constructive.
As of 9:34 a.m. ET, WTI Crude was down 5.71% at $99.91, and Brent Crude was down 5.64% at $106.10.
Oil extended the losses from Monday, when prices tumbled after China, the world's largest oil importer, imposed a lockdown in Shanghai due to the high number of COVID infections, rekindling concern about the loss of oil demand in the top crude importing market.
The Monday drop in oil prices was another huge day-to-day swing in Brent crude prices, which plunged by nearly $11 a barrel on the day, or around 9 percent, Javier Blas, energy and commodities columnist at Bloomberg, noted on Monday. In absolute dollar terms, Monday's oil price slide was the third-largest one-day fall, but in percentage terms, it was only the 27th largest one-day drop, Blas added.
Following a volatile start to trade early in the day on Tuesday, oil prices tumbled in the a.m. ET after signs emerged about a potentially positive outcome of the peace talks between Russia and Ukraine, the first such talks in more than two weeks.
During the talks in Istanbul on Tuesday, Russia promised to scale back significantly its military operations and activity around Ukraine's capital city of Kyiv and in the northern city of Chernihiv. Ukraine, for its part, proposed it would keep a neutral status and would not join alliances or host troops of other countries on its territory. Ukraine, however, wants international security guarantees to keep it from attacks.
According to Reuters, the leading Russian negotiator Vladimir Medinsky said he would review Ukraine's proposals and report on them to Russian President Vladimir Putin.
Hopes of peace sent oil prices plummeting early on Tuesday, although it's unclear whether sanctions against Russia could be removed anytime soon.
By Tsvetana Paraskova for Oilprice.com
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Comments
A peaceful settlement of the Ukraine conflict could see Brent crude price returning to the pre-conflict level $94-$95 a barrel.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London