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Oil prices skyrocket, IEA demands reduced energy usage

Gas prices in Westchester are above $ 6 as pump prices continue to rise across Southland on Sunday, March 13, 2022 in Los Angeles, California.

Jason Almond | Los Angeles Times | Getty Images

Oil prices rose further on Monday after negotiations between Russia and Ukraine seemed to show no signs of progress, markets continued to suffer from tight supply, triggering calls from the International Energy Agency to reduce oil demand. rice field.

Crude oil futures trading in Asia on Monday morning rose more than 3%. The international benchmark Brent crude was $ 111.46 and US futures were $ 108.25.

Oil prices have been fluctuating in recent weeks, dropping more than 20% last week to below $ 100 after hitting a record high in March. It soared again in the second half of last week and exceeded that level.

Mizuho Bank said in a note on Monday that two factors are pushing up oil prices: prolonged uncertainty in Russia and Ukraine and the impact of China’s latest Covid in anticipation of deregulation By Friday, hoping to be less disastrous, five districts were allowed to resume work and resume public transport, Reuters reported.

Ukrainian and Russian officials have met intermittently for peace talks that have previously failed to make major concessions, yet Ukrainian President Volodimir Zelenxie has another talk with Moscow. Requested a round.

“If these attempts fail, it will mean that this is World War III,” Zelensky told CNN’s Fareed Zakaria in an interview aired Sunday morning.

“I saw the breakdown of the peace talks between Russia and Ukraine. ANZ Research analysts Bryan Martin and Daniel Hines said in a memo on Monday that crude oil prices are expanding their rebound on Friday.

The industry’s apparent ability to close potential gaps calls for reduced consumption.

Bryan Martin and Daniel Hines

ANZ Research

Meanwhile, tight supply continued to be concerned about the market, and on Friday the International Energy Agency (IEA) called for “emergency measures” to reduce oil usage.

The Russia-Ukraine War has raised concerns about supply disruptions as a result of US sanctions on Russia’s oil and gas. The UK and the European Union also said they would phase out Russian fossil fuels. Russia supplied 11% and 17% of the world’s oil consumption. According to Goldman Sachs statistics, it is equivalent to 40% of global gas consumption in 2021 and 40% of Western Europe’s gas consumption during the same period.

The European Union will meet with US President Joe Biden this week. The EU is considering an oil embargo on Russia over a provocative invasion of Ukraine.

The Commonwealth Bank of Australia warned on Monday that oil prices have fallen below their recent peak as markets continue to price oil “by assessing the potential for diplomatic resolution of the Ukrainian dispute.”

“Physical shortages associated with current sanctions against Russia will ultimately play a more dominant role in oil pricing,” said Vibeck Dahl, head of the bank’s Energy Commodity Research Department.

“It’s clearly impossible for the industry to close the potential gap, so consumption needs to be reduced,” said an analyst at ANZ Research.

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OPEC + has shown in its latest report that some producers are still below supply quotas, and Reuters quotes sources saying the alliance failed to meet its target of more than one million barrels a day. is doing.

In the 10-point plan, the IEA’s proposals to reduce oil demand include reducing vehicle speed limits, working from home for up to three days a week, and avoiding air travel on business trips. I did.

“We estimate that full implementation of these measures in developed countries alone will reduce oil demand by 2.7 million barrels per day within the next four months compared to current levels,” the IEA said. Said on Friday.

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