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Oil prices extended their losses on Monday as investors closely monitored diplomatic efforts to resolve the war in Ukraine and assessed the potential impact of resumed crude exports from northern Iraq.
Market Overview:
- Brent crude fell by $0.14 (-0.2%), trading at $74.29 per barrel by 08:43 GMT.
- West Texas Intermediate (WTI) declined $0.21 (-0.3%) to $70.19 per barrel.
- Both benchmarks had dropped over $2 on Friday, recording weekly declines of 0.4% and 0.5%, respectively.
Key Factors Driving Oil Prices:
1. Ukraine Peace Talks and U.S.-Russia Dialogue
- The war in Ukraine enters its fourth year, with EU leaders set to hold an extraordinary summit on March 6 to discuss additional support for Ukraine and European security measures.
- Ukrainian President Volodymyr Zelenskiy indicated willingness to step down if it leads to peace.
- U.S. President Donald Trump has initiated direct talks with Russia without including Ukraine or the European Union. Russian and U.S. negotiators are expected to meet this week.
2. Sanctions on Russian Oil and Market Uncertainty
- Western sanctions continue to impact Russian oil exports, disrupting global supply flows.
- However, an end to the war would not immediately increase Russian crude exports, as Russia remains bound by OPEC+ production curbs.
- Analysts warn that easing geopolitical risks could still drive oil prices lower in the near term.
3. Potential Increase in Iraqi Oil Exports
- Oil prices are also facing downward pressure due to expectations of higher supply from Iraq.
- Iraq plans to resume crude shipments from Kurdistan’s oilfields via the Iraq-Turkey pipeline, with an expected daily export volume of 185,000 barrels per day.
- However, the timeline for resumption remains uncertain, contributing to market volatility.
Market Outlook
- Analysts expect geopolitical events and U.S. policy decisions to heavily influence short-term oil price movements.
- The potential easing of the Ukraine conflict and increasing Iraqi supply could lead to further price declines unless countered by new supply disruptions or OPEC+ policy adjustments.
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