Oil prices extend last week’s decline, fell by $4 per barrel

Oil prices continued last week’s losses to drop by around $4 per barrel during early trade on Monday after a US official said there were signs that Russia might be open to substantive negotiations over Ukraine.

Brent crude futures were down by $3.82 or 3.39% at $108.89 per barrel at 7.36 am GMT on Monday. US West Texas Intermediate (WTI) crude futures slipped $3.96 or 3.62% to $105.37 per barrel. Both contracts have boomed since Russia’s invasion of Ukraine started on February 24 and are up approximately 40%, year to date.

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US Deputy Secretary of State Wendy Sherman on Sunday said that Russia is showing signs it might be open to having substantive talks over Ukraine, even as Moscow currently is intent on “destroying” its neighbour. Russia’s invasion, which it calls a “special operation,” has disturbed global energy markets.

Brent crude declined 4.8% last week and US WTI lost 5.7%, both recording their sharpest weekly fall since November 2021. This came after both contracts hit their highest levels since 2008 earlier in the week due to concerns over supplies after the United States and European allies considered banning oil imports from Russia.

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On March 8, the US announced a ban on Russian oil imports and Britain said it would phase them out by the year-end. The decline in prices was supported by comments from a United Arab Emirates ambassador that the country supports production increases and would encourage OPEC to consider higher production, according to a Reuters report.

Due to a lack of spare capacity and low investment, OPEC, Russia and other oil-exporting nations are struggling to meet existing output quotas.

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“The U.S. 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 Research analysts in a note on Monday.

Russia is the world’s largest exporter of crude and oil products combined, exporting around 7 million barrels per day or 7% of global supplies.

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Talks between Russia and Ukraine will continue on Monday, Kremlin spokesperson Dmitry Peskov was quoted as saying on Sunday by the RIA news agency.

Peskov made the statement after Ukrainian presidential adviser Oleksiy Arestovych said Ukraine and Russia were actively conducting talks on Sunday.