Oil Pulls Back From $100 Amid Report That Putin Is Open to Talks

(Bloomberg) — Oil extended its retreat from a seven-year high, slipping back below $100 a barrel as Russia’s invasion of Ukraine forced traders to grapple with a fluid market environment.

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Futures in New York traded below $92 a barrel after surging to $100 on Thursday as Russia launched an attack on its neighbor. Prices subsequently retreated in Thursday’s afternoon session as Western governments said they wouldn’t impose sanctions on energy exports. The pullback continued on Friday amid reports that President Vladimir Putin is open to sending a delegation to Minsk for peace talks with Ukraine.

“It seems that the US and its allies want to inflict pain on Russia but do not want to impede their ability to deliver energy products to the world,” said Bart Melek, head of commodity strategy at TD Securities.

Still, buyers like China have briefly paused purchases of Russia’s flagship Urals grade on concern that the rupture in international relations may yet complicate dealings with Moscow.

The U.S. imposed its toughest-ever sanctions on Russia as tanks and troops moved closer to the Ukrainian capital, but said restrictions on currency clearing would include carve-outs for energy payments, a crucial source of revenue for Moscow.

U.S. President Joe Biden said Russia will not be barred from the Swift international banking network because Europe opposed that action. Despite that, some European lenders are scaling back exposure to Ukraine and Russia in a threat to the credit lines essential to trade.

“Even though sanctions are not explicitly hitting Russian energy exports we are likely still going to see reduced energy flows from Russia,” said Bjarne Schieldrop, chief commodities analyst at SEB AB.

Russia’s invasion of Ukraine has spooked a global oil market that was already perilously tight due to the inability of supply to keep up with the demand recovery from the pandemic. Biden said the U.S. is working with other major consuming nations on a coordinated reserves release. Any such sales would need to be very large to have a major impact on prices.

Japan and Australia have indicated they may be part of an international release, but China said it had no immediate plans to intervene in oil markets. A spokesperson for Beijing said it would only consider such a move when the geopolitical situation had stabilized. South Korea said it was preparing to take action if there’s a disruption to energy shipments.