Oil falls 8% on Russia-Ukraine talk hopes, China lockdowns

by Staff Writer 14-03-2022 | 9:34 PM

NEW YORK (Reuters) - Oil prices dropped about 8% on Monday to the lowest in two weeks, as diplomatic efforts between Ukraine and Russia looked like they might end their conflict, which would boost global supplies, while a pandemic-linked travel ban in China cast doubt on the demand outlook.

Brent futures fell $8.64, or 7.7%, to $104.03 a barrel by 10:59 a.m. EDT (1459 GMT). U.S. West Texas Intermediate (WTI) crude fell $8.74, or 8.0%, to $100.59.

That puts both benchmarks on track for their lowest settlements since Feb. 28. Both have surged since Russia's Feb. 24 invasion of Ukraine and are up roughly 34% so far this year.

Brent and WTI have logged their most volatile 30 days since June 2020. WTI had it 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 "hard" talks on a ceasefire, immediate withdrawal of troops and security guarantees with Russia, despite the fatal shelling of a residential building in Kyiv.

A northeastern Chinese province imposed a rare travel ban due to an Omicron outbreak.

Russia's output of oil and gas condensate rose to 11.12 million barrels per day (bpd) so far in March, two sources familiar with production data told Reuters, despite sanctions.

The United States has announced a ban on Russian oil imports and Britain said it would phase them out by the end of 2022. Russia is the world's top exporter of crude and oil products combined, shipping about 7 million bpd or 7% of global supplies.

A senior minister said British Prime Minister Boris Johnson was trying to persuade Saudi Arabia to increase its oil output, while International Energy Agency (IEA) chief Fatih Birol urged oil-producing countries to pump more.