© Reuters.

By Gina Lee

Investing.com – Oil was down on Tuesday morning in Asia, as Ukraine and Russia look to continue peace talks. Fears that a COVID-19 lockdown in Shanghai, China could impact fuel demand also contributed to the losses.

dropped 1.13% to $108.25 by 12:25 AM ET (4:25 AM GMT) and fell 1.12% to $104.77. Brent and WTI contracts lost around 7% on Monday.

Ukraine and Russia will resume peace talks in Turkey later in the day, the first in over two weeks since Russia invaded Ukraine on Feb. 24. “Oil prices are under pressure again on expectations for a peace talk between Ukraine and Russia, which could lead to an easing of sanctions or avoidance on Russian oil by the West,” Nissan Securities general manager of research Hiroyuki Kikukawa told Reuters.

“A successful ceasefire could also raise the prospect of reviving an Iranian nuclear deal,” he added.

Fuel demand in China, the world’s largest oil importer, also remains a concern as the city of Shanghai remains under a two-stage, nine-day lockdown to curb rising numbers of COVID1-9 cases.

“Selling pressure grew on concerns that China may impose more restrictions in other places to contain the pandemic and fuel demand may be reduced further,” NLI Research Institute senior economist Tsuyoshi Ueno told Reuters.

“Increased market volatility has made it difficult for long-term investors to participate, as short-term investors tend to take profits or cut losses more quickly than before,” he added.

The Organization of the Petroleum Exporting Countries and allies (OPEC+) will also meet on Thursday, where it will likely stick to plans for a modest increase in oil output in May 2022, several sources close to the group told Reuters. This is despite the surging prices due to the war in Ukraine and calls from the U.S. and other consumers to increase supply.

Global demand has risen back to pre-COVID-19 levels, but the market remains tight as OPEC+ has been slow to restore supply cuts enacted at the beginning of the pandemic in 2020. U.S. oil exports have climbed after Russia’s invasion of Ukraine, and barrels of domestic oil that would typically go to the Cushing, Oklahoma, storage hub are instead being exported via the Gulf Coast, according to traders.

Investors also await , due later in the day.

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