Oil price sinks 8pc on Russia-Ukraine talk hopes, China lockdowns

NEW YORK: Oil prices dropped about 8 percent 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-linkedtravel ban in China cast doubt on the demand outlook.

Brent futures fell $8.64, or 7.7 percent, to $104.03 a barrel by 1459 GMT. U.S. West Texas Intermediate (WTI) crude fell $8.74, or 8.0 percent, 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 percent so far this year.

"Beside new talks between Ukraine and Russia, I guess new lockdowns in China are the reason for a negative start of the week for crude oil," said Giovanni Staunovo, an analyst at UBS, a bank.

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.

A northeastern Chinese province imposed a rare travel ban due to an Omicron outbreak. "Oil prices might continue moderating this week as investors have been digesting the impact of sanctions on Russia, along with parties showing signs of negotiation towards (a) ceasefire," said Tina Teng, an analyst at CMC Markets, a financial services company.

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 percent 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.

India said it would take "appropriate" steps, indicating the country could release more oil from national stocks. Indian officials also said New Delhi was considering a Russian offer to buy crude and other commodities at discounted prices via a rupee-rouble transaction.