IEA calls for a cut in energy usage as oil prices jump due to fears around Russia-Ukraine.

Oil prices rose even higher after discussions between Russia-Ukraine failed to yield any positive results. This made the market continue to worry about limited supplies, which prompted the International Energy Agency (IEA) to push for a reduction in the demand for oil.

In Asia trading on Monday morning, crude futures were up over 3%, with international benchmark Brent crude at $116.47 and U.S. futures at $108.25.

In recent weeks, oil prices have been extremely volatile, surging to new highs in the month of March and then plummeting by more than 20% last week, falling below $100. They surged above that level again in the second half of the week.

Two factors are pushing oil prices higher, according to Mizuho Bank, in a note released on Monday, and they are; lingering Russia-Ukraine uncertainty and hopes that China's latest Covid impact will be less severe than expected amid prospects of lessening restrictions.

According to reports from Reuters, on Friday Shenzhen’s main hub was partly reopened, with five districts allowed to resume work and public transit.

Officials from Ukraine and Russia have convened on ad hoc for peace talks that have so far failed to yield significant concessions. Nonetheless, Ukrainian President Volodymyr Zelenksyy has requested a new round of negotiations with Moscow.

In an interview that aired on Sunday morning, the President told CNN’s Fareed Zakaria “If these attempts fail, that would mean that this is a third world war.”

A note written on Monday morning by ANZ Research analysts Brian Martin and Daniel Hynes revealed that; “The breakdown of peace talks between Russia and Ukraine saw crude oil prices extend their rebound on Friday. However, it failed to offset the losses earlier in the week, with Brent crude ending down more than 4%.”

In the meantime, markets were concerned about restricted supplies, prompting the International Energy Agency (IEA) to call for "immediate steps" to curb oil consumption on Friday.

The conflict between Russia and Ukraine has raised concerns about supply interruptions as a result of US sanctions on Russian oil and gas. The United Kingdom and the European Union have also stated that they will cut out Russian fossil fuels. 

According to Goldman Sachs figures, Russia contributed 11 percent of global oil consumption and 17 percent of global gas consumption in 2021, as well as up to 40% of Western European gas consumption.

Governments from the European Union will meet with US President Joe Biden this week as the EU contemplates imposing an oil embargo on Russia in response to its unjustified invasion of Ukraine.

On Monday, the Commonwealth Bank of Australia warned that oil prices have slipped below recent heights, owing to the fact that markets are still mostly pricing oil by “assessing the likelihood of a diplomatic solution to the Ukraine conflict.”

“Physical shortages, linked to current sanctions on Russia, though will eventually play a more dominant role in oil price determination”. This was stated in a note by Vivek Dhar, who is the bank’s director of energy commodities research.

The ANZ research analysts also said, “The industry’s apparent inability to fill any potential gap has seen calls for consumption to be reduced.”

According to Reuters, OPEC+ missed its targets by more than 1 million barrels per day in its most recent report, indicating that certain suppliers are still falling short of their production quotas.

Reduced speed restrictions for automobiles, working from home for up to three days a week and avoiding air travel for business were among the IEA's ideas in a 10-point plan to reduce oil demand.

On Friday the IEA said, “We estimate that the full implementation of these measures in advanced economies alone can cut oil demand by 2.7 million barrels a day within the next four months, relative to current levels.