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IEA Calls for Oil Usage Reduction; Oil Prices Bounce Again on the Russia-Ukraine Conflict

IEA calls for oil usage reduction; oil prices bounce again on the Russia-Ukraine conflict

Oil prices jump higher than ever today as no signs of progress can be seen in the Russia-Ukraine talks. Over tight supply, markets were agonised and sparked a call by the IEA (International Energy Agency) over oil usage reduction. 

Crude futures were up more than 3% on Monday during Asia trading. Brent crude – international benchmark and U.S. futures were at $111.46 and $108.25, respectively. Oil prices in recent times have been labile. In March, they soared to great heights and collapsed more than 20% to touch below $100. They bounced in the latter half of the last week to rise above that level again. 

Oil prices are getting higher due to constant Russia-Ukraine uncertainty and the rise of COVID cases in China. The hopes of the new variant being less harmful, Mizuho Bank said in a note on Monday. Five districts were allowed to open up and restart work public transportation. Shenzhen was opened up partially, Reuters reported.

Officials from Russia and Ukraine met consistently in the past weeks, but no results have been generated after these talks. These failed to make any progress, and still, Volodymyr Zelenskyy (the Ukrainian President) has called for another round of negotiations with Moscow. 

Brian Martin and Daniel Hynes, analysts of the ANZ Research, wrote in a Monday note that crude oil prices rebounded on Friday after the failure of Russia and Ukraine peace talks. Although earlier it failed to counter the losses, and Brent crude ended down more than 4%. CNN’s interview with Zelenskyy aired on Sunday morning. Zelenskyy said to CNN’s Fareed Zakaria that if these talks fail, then it would mean that this is a third world war.

U.S. sanctions on Russian oil and gas have led the supply chains to fret. According to Goldman Sachs statistics, in 2021, Russia supplied global oil consumption at 11% and global gas consumption at 17%. Also, the U.K is phasing out Russian fossil fuels. 

The Presidents of the countries in the European Union will meet U.S. President Joe Biden in the coming week due to the Russian oil ban by the EU over the Ukraine invasion. 

Oil prices are falling from peaks because the oil is getting priced by markets hoping for a diplomatic solution to the Russia-Ukraine conflict, warned the Commonwealth Bank of Australia on Monday. The bank’s director of energy commodities research, Vivek Dhar, said that the physical shortages occurring due to sanctions on Russia would impact oil prices. The ANZ research analysts have seen calls for consumption reduction due to the industry’s inability to fill any gaps. 

The IEA (International Energy Agency) has put out a 10-point plan regarding reducing oil consumption, limiting the speed of vehicles, less air travel, and three days of work from home. 

ON FRIDAY, the IEA said that if these measures are adequately implemented in developed economies, the oil consumption will be cut by 2.7 million barrels a day within four months. 

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