Oil and wholesale gas prices slide as diplomatic efforts step up to end Ukraine war

Ukrainian president Volodymyr Zelenskyy speaks in Kyiv. The country says it has begun hard talks on a ceasefire,

Global oil prices slumped 8% and the price of European wholesale gas dropped by 13%, as diplomatic efforts increased yesterday to resolve the war between Russia and Ukraine.

Brent crude traded at just over $104 a barrel and gas for delivery in Europe this summer fell to €111.50 per megawatt per hour.

Energy prices have surged since Russia's February 24 invasion of Ukraine, with the price of crude oil up roughly 34% so far this year.

Ukraine said yesteray it had begun hard talks on a ceasefire, immediate withdrawal of troops and security guarantees with Russia, despite the fatal shelling of a residential building in Kyiv.

"Oil prices might continue moderating this week as investors have been digesting the impact of sanctions on Russia, along with parties showing signs of negotiation towards [a] ceasefire," said Tina Teng, an analyst at CMC Markets. 

Russia is the world's top exporter of crude and oil products combined, shipping about 7% of global supplies.

International Energy Agency (IEA) chief Fatih Birol urged oil-producing countries to pump more. 

India said it would take appropriate steps, indicating the country could release more oil from national stocks. 

The US needs to make a decision to wrap up a deal to salvage Iran's 2015 nuclear accord with world powers, the Iranian foreign ministry spokesperson has said as some feared talks in Vienna, Austria might collapse. 

Analysts said an agreement with Iran could add another 1m barrels of oil supply a day to the market, but that would not be enough to offset declining supply from Russia. 

Meanwhile, Ukraine's economy is expected to contract by 10% in 2022 as a result of Russia's invasion, but the outlook could worsen sharply if the conflict lasts longer, the IMF said in a new report. 

The report, prepared ahead of the IMF's approval of $1.4bn (€1.3bn) in emergency financing, said Ukraine's economic output could shrink by 25% to 35%, based on real wartime GDP from Iraq, Lebanon and other countries at war.

The report, dated March 7, said Ukraine has an external financing gap of $4.8bn, but its financing needs were expected to grow and it would require significant additional concessional financing.

Reuters. Additional reporting Irish Examiner