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(Bloomberg) – Heat is coming out of the oil market, and fast.

West Texas Intermediate oil futures have fallen more than 20% since closing at their highest since 2008 a week ago, falling below $100 a barrel on Tuesday. This followed a tumultuous period of trading that saw prices fluctuate wildly, with intraday swings for global benchmark Brent crude eclipsing $20.

The latest developments to shake up the market are a resurgence in Covid-19 cases in China, the world’s largest oil importer, and what appears to be progress in ceasefire talks between Ukraine and the Russia. With concerns still looming that the disruption in Russian crude flows could squeeze an already tight market, OPEC and others were quick to stress there was no shortage.

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“Sentiment in commodity markets remains fueled by headlines, with talks between Russia and Ukraine raising hopes that supply disruptions will be minimal,” said Daniel Hynes, senior commodities strategist at Australia. & New Zealand Banking Group Ltd. under increasing pressure. However, this does not reflect the fundamental picture, with Russian oil becoming increasingly isolated.

Buyers continue to shun Russian crude, with a shipment of its flagship Urals remaining unsold even after traders slashed the price to a record discount. However, Surgutneftegas PJSC is offering buyers some financing flexibility to keep crude flowing, while India is developing a mechanism to facilitate trading using local currencies.

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Ukraine’s top negotiator said they were working on a potential ceasefire with Russia before talks broke down so each side could take stock. The United States and China also had a “substantial discussion” at their first high-level meeting on the war. The Federal Reserve, meanwhile, is expected to start tightening monetary policy this week, which is weighing on markets in general.

UK lawmakers have been told by Energy Aspects Ltd. that the country may have to ration commodities like natural gas and diesel if the war in Europe continues. Consumers are already feeling the pain at the pump, with transportation fuel prices rising around the world.

The latest virus outbreak in China, with increasing cluster caused by the highly infectious variant of omicron in some of its cities and the most developed economic areas is an unprecedented challenge for the strategy Covid Zero the country. The authorities have now locked Langfang city in northern Hebei Province one day after having isolated the 17.5 million residents of Shenzhen.

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