• Crude oil price remains range-bound as Russia-Ukraine talks resume.
  • Both sides have expressed optimism that negotiations have taken a positive turn.
  • Suspension of talks on the Iranian nuclear deal may continue to support crude oil prices above $100 per barrel. 

Russia-Ukraine talks

In the new week, crude oil price continues to react to the ongoing war in eastern Europe. Late last week, President Putin stated that talks between both sides had made a “positive shift.”

Negotiators from Russia and Ukraine are set to resume talks on Monday at a time when Russia has attacked a Ukrainian military base close to its border with Poland. As the week unfolds, investors will be keen on the progress of these talks. A breakthrough will likely offer some relief to surging energy prices.   

Iranian oil

As recent as a week ago, heightened hopes over the return of Iranian oil cast a glimmer of light in an energy market that continues to be characterized by tight supplies.  Talks between the director-general at the International Atomic Energy Agency (IAEA) and top Iranian officials made major strides towards the revival of the 2015 nuclear deal. The only unresolved issue was the closure of IAEA’s investigations on Iran’s nuclear sites. 

A breakthrough in the negotiations would be expected to bring in some much-needed oil into the market — an aspect that would likely ease the soaring crude oil price.

However, a stalemate on those talks has since dwindled optimism that Iranian oil will return to the global in the near future. On Friday of last week, Iran and other global powers paused the negotiations after Russia’s fresh demands. Amid the ongoing war in eastern Europe, Russia demanded for guarantees from the US that the sanctions enacted for its attack on Ukraine will not impact its future partnerships with Iran. 

Subsequently, the US has stated that the diplomatic talks, which have been ongoing for about 11 months, are on hold. While on CBS’ Face The Nation on Sunday, Jake Sullivan – a White House advisor on national security – indicated, “As things stand right now, the various negotiators are back home in their capitals, and we will have to see what happens in the days ahead with respect to the diplomacy around the nuclear deal.”

The situation has further been complicated by Iran’s attack on Iraq. In addition to Sunday’s missile strike by Iran in northern Iraq, the country has suspended the talks brokered by Iraq with the aim of restoring the nation’s diplomatic ties with Saudi Arabia. The US, which is a major party in the Iranian nuclear deal talks has condemned the attack. 

Crude oil technical outlook

Brent futures have extended last week’s losses even as it remains above the psychologically crucial level of 100. At the beginning of the past week, it rallied to its highest level in 14 years. Since then, it has dropped by about 20.50%.

As of the time of writing, Brent oil was trading at 109.71, down by 2.35%. On a daily chart, it remains above the 25 and 50-day exponential moving averages. 

Even with the recorded price swings, I remain bullish on the crude oil price. In the short term, I expect it to trade within a horizontal channel of between 105.78 and 114.23 as investors eye developments in the Russia-Ukraine crisis in the new week. 

A major breakthrough in the ongoing Russia-Ukraine talks may have crude oil prices momentarily drop below 100 to find support along with the 50-day EMA at 97.57. On the flip side, a stalemate in the negotiations may push Brent futures to 120 as the week unfolds.

Brent Crude daily price chart