Crude oil prices fell significantly yesterday following the recent call for peace talks between Russia and Ukraine. The West Texas Intermediate (WTI) crude oil tested a new low at $101.2 yesterday and currently holding in this region.
Yesterday, Ukraine and Russia were set to meet for the first peace talks in Istanbul after several failed attempts. Many believe that this meeting is likely to yield positive results and bring an end to the war. This means that Russia will once more be able to supply more oil to other countries if the many bans placed on her are lifted.
Similarly, oil demand has been significantly reduced, causing prices to fall more due to the two-week complete lockdown in Shanghai, China, which is known today as the world’s most significant consumer of oil. China had witnessed a sudden revival and wild spread of Covid-19 in recent days leading to the call for a total lockdown to control the spread. This means economic activity will be halted, and oil demands will be significantly reduced due to the stoppage of major economic activities and productions.
Investors are currently looking to the Organisation for Petroleum Exporting Countries (OPEC), set to meet this Thursday to reveal plans for an increase in crude oil supply.
Above all, the outcome of the peace talks between Russia and Ukraine this Tuesday will determine the future supply rate of crude oil in the coming month.
While Ukraine had revealed that it was hoping that the first face-to-face peace talks with Russia in over two weeks, set for Tuesday, could lead to a ceasefire and bring an end to the war, some fear that President Vladimir Putin does not appear ready to make compromises to end the war any moment from now if his demands are not met.
There are more pressures facing the crude oil prices now than ever before – either to rise again if the peace talks prove abortive or to fall more if it succeeds.