Oil prices rose even higher on Monday after Russia-Ukraine talks failed to produce any signs of progress. Markets remained concerned about tight supply, prompting the International Energy Agency to call for a reduction in oil demand.
Crude futures were up more than 3% in Asia trading on Monday morning, with international benchmark Brent crude at $111.46 and US futures at $108.25.
Mizuho Bank said on Monday that two factors were pushing up oil prices: lingering Russia-Ukraine uncertainty and hopes that China’s latest Covid impact would be less severe than expected due to expectations of easing restrictions. Shenzhen’s main hub partially reopened on Friday, with five districts allowed to resume work and public transportation.
Ukrainian and Russian officials have met on an irregular basis for peace talks, which have failed to yield critical concessions. Nonetheless, Ukrainian President Volodymyr Zelenksyy has requested a new round of negotiations with Moscow.
Tight supply has continued to worry markets, prompting the International Energy Agency (IEA) to call for “emergency measures” to reduce oil consumption on Friday.
The Russia-Ukraine conflict has raised concerns about supply disruptions due to US sanctions on Russian oil and gas. The United Kingdom and the European Union have also stated that they will phase out Russian fossil fuels. Russia supplied 11% of global oil consumption and 17% of global gas consumption in 2021, as well as up to 40% of Western European gas consumption during the same period.
OPEC+’s latest report shows that some producers are still falling short of their supply quotas, with the alliance missing its targets by more than 1 million barrels per day.
The IEA’s suggestions to reduce oil demand in a 10-point plan included lowering vehicle speed limits, working from home up to three days a week, and avoiding business air travel.
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