US Oil briefly dips below $100 after Russia says it will ‘significantly scale back’ assault on kyiv

The sell-off began after Russia indicated it would call off its assault on parts of Ukraine, easing fears over energy supplies.
Following peace talks between Russia and Ukraine on Tuesday, Russia said it would “significantly reduce” its military assault on the Ukrainian cities of kyiv and Chernihiv.

U.S. oil fell 7% to a low of $98.44 a barrel on Tuesday morning. Brent, the global benchmark, fell to $104.84 a barrel, down nearly 7%.

However, by the end of the day, US oil was down just 2%, standing at $110.23 a barrel. Brent fell 1.6% to $104.24 a barrel.

The rebound from the day’s lows reflects uncertainty about the next steps in the war and skepticism about Russia’s ability to back up its words with deeds.

“People have come to their senses,” said Robert Yawger, vice president of energy futures at Mizuho Securities. “There’s a realization that it’s not over. It’s far from over.”

The US Department of Defense warned Tuesday afternoon that while “a small number” of Russian forces have moved away from kyiv, Russia can still inflict “massive brutality” on the city.

“We believe this is a repositioning, not a real withdrawal,” Pentagon press secretary John Kirby said during a press briefing.

Andy Lipow, president of Lipow Oil Associates, said the market interpreted the latest headlines on the Russian-Ukrainian negotiations as a “step towards a ceasefire”.

However, investors have learned to treat comments from officials in Russia with a dose of skepticism.

“You could easily take all of this to mean that Russia is pulling out to regroup and give it another chance,” Yawger said. “I wouldn’t trust them.”

Even if a ceasefire is eventually reached, supply disruptions may persist. The war has seriously damaged Russia’s place in the energy ecosystem.

“I expect the sanctions and the oil industry’s desire to move away from Russian supplies will be with us for decades,” Lipow said.

Oil prices plunged on Monday on fears that lockdowns in Shanghai could drastically reduce China’s energy demand.


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