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Investors monitor ceasefire talks between Russia and Ukraine to keep oil prices steady

Investors monitor ceasefire talks between Russia and Ukraine to keep oil prices steady

Oil prices remained stable on Monday, as investors assessed the prospects for ceasefire negotiations aimed at ending Russia-Ukraine War. This could lead to a rise in Russian oil being sold to global markets.

Brent crude futures fell 8 cents or 0.1% to $72.08 per barrel at 0046 GMT. U.S. West Texas Intermediate Crude fell 5 cents or 0.1% to $68.23.

Both benchmarks closed higher on Friday, recording a second weekly gain after fresh U.S. Sanctions on Iran and the newest output plan by the OPEC+ producer groups raised expectations for tighter supply.

After discussions with Ukrainian diplomats on Sunday, a U.S. delegation will meet with Russian officials to discuss progress towards a Black Sea ceasefire as well as a wider cessation in violence in the Ukraine war.

Toshitaka Takawa, an analyst with Fujitomi Securities, said that the prices fell because of expectations of progress in peace talks between Russia and Ukraine as well as a possible easing of U.S. sanction on Russian oil.

He added that investors were holding back large positions while they evaluated future OPEC+ production patterns beyond April.

OPEC+ – the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia – released a new schedule on Thursday for seven member countries to continue to reduce their oil production to compensate for pumping beyond agreed levels. This will be more than the monthly production increases the group plans to implement next month.

Two industry sources and Friday's calculations indicated that Kazakhstan's oil production has still reached a new record this month, thanks to the expansion of oilfields. This is a further increase over OPEC+ production quotas.

OPEC+ agreed to a series steps to support the market, including reducing output by 5,85 million barrels a day. This is equal to 5.7% of the global supply. On March 3, it confirmed that eight members of OPEC+ would increase their monthly production by 138,000 barrels per day from April onwards, citing a healthier market.

The market participants are also watching the impact of new U.S. sanctions related to Iran announced last week.

Iranian oil shipments into China will likely fall after the new U.S. restrictions on a refiner, tankers and other vessels. This will increase shipping costs. However, traders expect buyers to find ways to maintain at least a certain volume.

Baker Hughes, an energy services company, said that U.S. firms added oil and gas rigs this week for the first time since three weeks. (Reporting and editing by Christopher Cushing; Yuka Obayashi)

(source: Reuters)