West Texas Intermediate (WTI) crude oil fell below $100 a barrel for the first time since March 1, as negotiations between Ukraine and Russia appeared to grow more substantial.
Ukraine negotiator Mykhailo Podolyak said talks between Russian and Ukrainian officials focused on discussing a potential ceasefire with an immediate withdrawal of troops and security guarantees. Futures in New York fell more than 8% to a low of $99.76, trading inside a $10 range Monday. Brent fell to near $104 a barrel. WTI Crude has dropped more than $35 this month. The negotiations between the two countries are driving prices lower in the near term as markets are much more sensitive to sentiment than actual supply and demand calculation.
China placed 17.5 million people in Shenzhen under a lockdown amid a surge in Covid-19 infections and told people in Jilin province not to travel, the first time the country has sealed off an entire region since April 2020. Risks to demand have emerged with the resurgence of lockdown measures in China.
President Zelenskiy’s advisor informed that continuous discussions with Russia are under way by video, while President Putin engaged with his French and German counterparts after they talked with Zelenskiy. U.S. Secretary of State Antony Blinken also spoke with Ukraine’s foreign minister.
The virus resurgence in China is causing some concerns about oil demand. That signals the start of a week that will test whether Russia plans to repay its international debt. The Federal Reserve will raise interest rates for the first time since 2018, potentially strengthening the dollar. The Federal’s interest rate decision will come on Wednesday.
Russia started looking for U.S. guarantees that sanctions imposed for its invasion wouldn’t affect its planned partnership with Iran, the OPEC producer. The prospect of extra oil supply from Iran quickly alleviating a tight market was called off on Friday after Tehran and world powers suspended talks to restore a nuclear deal due to a missile strike on Iraq.