Oil prices extended last week’s losses on Monday as investors remained cautious over ongoing diplomatic efforts to resolve the Russia-Ukraine conflict and the potential resumption of crude exports from northern Iraq.
Brent crude oil edged down by 14 cents, or 0.2 percent to $74.29 per barrel as of 07:43 WAT while West Texas Intermediate (WTI) crude declined by 21 cents, or 0.3 percent to $70.19 per barrel.
The losses followed a sharp decline on Friday, when both benchmarks dropped by more than $2 per barrel, capping weekly losses of 0.4 percent for Brent and 0.5 percent for WTI.
Investor sentiment was weighed down by uncertainty surrounding diplomatic negotiations aimed at ending the war in Ukraine, which entered its fourth year on Monday.
European Union (EU) leaders are set to meet for an extraordinary summit on March 6 to discuss additional security measures and economic support for Ukraine. Ukrainian President Volodymyr Zelenskiy signaled a willingness to step down if it would secure peace for his country.
Meanwhile, former U.S. President Donald Trump has initiated backchannel discussions with Russia without including Ukraine or the European Union, raising speculation over the future of negotiations. Russian and U.S. officials are scheduled to hold further talks this week.
Although sanctions imposed by the United States and European Union on Russian oil exports have reshaped global energy supply chains, analysts suggest that an end to the war may not immediately translate to increased Russian crude output.
Russia remains a core member of the OPEC+ alliance, which has maintained production curbs to stabilize global oil markets.
However, the removal of geopolitical risk premiums could exert downward pressure on crude prices. Harry Tchilinguiran, head of research at Onyx Capital Group, noted that the market is factoring in potential de-escalation in Ukraine, which could reduce volatility in oil prices.
Another key factor influencing market sentiment is the anticipated resumption of crude exports from northern Iraq via the Iraq-Turkey pipeline, which has been inactive for nearly two years.
“The downward spiral in crude oil prices is driven by pressure from the U.S. president on Iraq to resume oil exports from Kurdistan oilfields, which could improve supply flows in global oil markets after nearly two years of disruption,” said Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm.
An official from the Iraqi oil ministry confirmed that 185,000 barrels per day would be exported from Kurdistan’s oilfields once shipments resume through the Iraq-Turkey pipeline, further increasing supply to the market.
Market analysts project that short-term oil price movements will be shaped by developments in the Russia-Ukraine negotiations, evolving U.S. foreign policy on energy security, and the pace at which Iraq restores crude exports.
Despite near-term price weakness, energy traders are closely monitoring production trends within OPEC+ and upcoming U.S. policy decisions that could impact supply dynamics.
For now, oil markets remain volatile with investors treading cautiously as they assess the broader implications of geopolitical shifts and production adjustments in key oil-producing regions.
