New York (CNN Business) – Oil prices fell sharply on Tuesday after Russia indicated it will dial back its assault in parts of Ukraine.
The developments eased energy supply fears that sent oil prices skyrocketing earlier this month.
US oil tumbled 6.4% to $99.25 a barrel in recent trading. Brent crude, the world benchmark, lost 5.4% to $106.43 a barrel.
Following peace talks between Russia and Ukraine on Tuesday, Russian Deputy Defense Minister Alexander Fomin said the Russian Ministry of Defense has decided to “drastically reduce hostilities” in the Kyiv and Chernigov, according to state media RIA.
The Russian official said the changes are part of an effort to “increase mutual trust and create the necessary conditions for further negotiation,” RIA reported.
“I wouldn’t say peace is breaking out, but there’s a glimmer of hope, apparently,” said Robert Yawger, vice president of energy futures at Mizuho Securities.
However, Yawger stressed that sanctions on Russia aren’t going away overnight, nor is the stigma that has caused many energy companies, banks and shipping companies from doing business with Russian energy firms. And there is no guarantee a ceasefire will be reached between Russia and Ukraine.
“You could easily take this all to mean Russia is just pulling back to regroup and give it another shot,” Yawger said. “I wouldn’t trust them.”
Oil prices plunged on Monday on concerns that lockdowns in Shanghai will sharply cut China’s demand for energy.