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Highlights
- Crude oil prices tumbled on Tuesday.
- The prices of both oil benchmarks tumbled nearly 7% on Monday.
- Both Russia and Ukraine were set to meet on Tuesday in Istanbul for their initial peace talks in over two weeks.
Crude oil prices continued their downward movement on Tuesday too as Russia and Ukraine advanced for peace talks. The prices were additionally weighted down by a demand squeeze in China amid rising cases of COVID-19 and a shutdown in the country's financial hub – Shanghai.
The prices of both oil benchmarks tumbled nearly 7% on Monday on expectations of lower fuel demand after Chinese authorities confirmed that they will shut Shanghai for a COVID-19 testing blitz over nine days.
Must Read: Crude oil rises on fresh Russia-Ukraine war warnings
Though, crude oil prices rose earlier on Friday to surpass US$120/bbl as traders assessed the impact of a missile attack on an oil distribution facility in Saudi Arabia.
Source: Refinitiv Eikon
On Tuesday, June delivery Brent Crude oil futures declined and last traded at US$107.88 per barrel down 1.47%, while May delivery WTI crude oil futures exchanged hands at US$104.36 per barrel, down 1.51% at 3:33 PM AEDT.
Also Read: Crude oil surges to 14-year highs on delays in Iranian talks
Russia-Ukraine peace talks and rising COVID-19 cases in China
The oil embargo imposed on Russia's crude oil imports has disrupted the global oil supply chain and had triggered the oil prices to surge to 14-year highs, last month. Russia and Ukraine are set to meet in Istanbul on Tuesday for their initial peace talks in over two weeks.
The boiling oil prices got some relief with the decision after both countries announced the commencement of peace talks. On top of that, a lockdown in Shanghai at this moment has offset tight supply concerns and creating further downward pressure on oil prices.
The government of Shanghai city stated on Sunday that all businesses and factories would suspend manufacturing or have staff work remotely in a two-stage lockdown over nine days. Furthermore, the market is also waiting for a planned meeting on Thursday between the Organization of the Petroleum Exporting Countries (OPEC) and its allies to decide the oil outputs for May.
Must Watch: As Russia-Ukraine War Intensifies, Commodities Also Soars
Despite the increased volatility, the prices of both crude oil benchmarks are more than 70% up against last year. Various ASX-listed oil and gas players have capitalised on the ongoing crude oil rally. Woodside Petroleum (ASX:WPL) share price busted to gain 37.52% in the last six months while it was trading 0.97% down at AU$32.84 per share, on Tuesday.
Another significant O&G player, Santos (ASX:STO) had also gained more than 10% in the last six months. Though the share prices dropped 0.57% on Tuesday in line with the fall in crude oil prices.
Apart from this, various other small and mid-cap companies including Karoon Energy (ASX:KAR), Melbana Energy (ASX:MAY), and Beach Energy (ASX:BPT) also logged a significant drop in their share prices on Tuesday.
Also Read: Crude oil slides from multi-year highs as Iran talks rev up
Bottom Line
Crude oil prices tumbled significantly on Tuesday on expectations of lower fuel demand from China and the possibility of peace talks between Russia and Ukraine.
Here’s how commodities performed in the last week click here
