Oil has dropped to its lowest level in the last two years

Reading time: 2 minutes

Oil prices fell by about 7% on Monday, to the lowest level in two weeks, with diplomatic efforts between Ukraine and Russia appearing to put an end to their conflict, boosting global supplies, while a travel ban China, linked to the Covid-19 pandemic, is questioning the prospects of demand, Reuters reports.

Brent oil futures fell 6.3 percent to $ 105.56 a barrel.

Contracts for West Texas Intermediate (WTI), a benchmark in the U.S. market, fell 7.2 percent to $ 101.51 a barrel.

Oil prices thus recorded the lowest levels of closure after February 28th.

Both contracts have risen since Russia’s invasion of Ukraine on February 24, with a 34% advance since the beginning of the year.

“Apart from the new talks between Ukraine and Russia, I suspect that the new restrictions in China are the reason for a negative start to the week for oil,” said Giovanni Staunovo, an analyst at UBS.

The Brent and WTI contracts recorded the most volatile 30 days in June 2020.

WTI had its most volatile month in April 2020, when prices turned negative, while Brent experienced its most volatile month in January 1991, during the Persian Gulf War.

Ukraine said on Monday it had begun “tough” talks on a ceasefire, immediate withdrawal of troops and security guarantees with Russia, despite a deadly residential building in Kyiv.

A northeastern Chinese province has imposed a rare travel ban on an Omicron outbreak.

“Oil prices could continue to moderate this week as investors have digested the impact of sanctions on Russia, and signs of a ceasefire in Ukraine,” said Tina Teng, an analyst at CMC Markets, a financial services company.

Russia’s oil and condensate production rose to 11.12 million barrels a day this year, two sources familiar with the production data told Reuters, despite sanctions.

The United States has announced a ban on oil imports from Russia, and the United Kingdom has said it will phase out them by the end of 2022.

Russia is the world’s largest exporter of crude oil and petroleum products, delivering about 7 million bpd or 7% of global deliveries.

A minister has said that British Prime Minister Boris Johnson is trying to persuade Saudi Arabia to increase its oil production, while the head of the International Energy Agency (IEA), Fatih Birol, urged oil-producing countries to pump more.

India has said it will take “appropriate” action, indicating that the country could release more oil from its national reserves.