Oil extends decline as Europe softens some Russian sanctions

Oil extended its biggest drop in more than five weeks as the European Union softened some of its proposed sanctions on Russian oil exports.

West Texas Intermediate futures fell below $103 a barrel in early Asian trading after sliding around 6 per cent on Monday. The bloc will scrap a proposed ban on EU-owned vessels transporting Russian crude following objections from members including Greece. Concerns about economic growth that roiled equities also added to bearish sentiment for commodities.

The oil market has been gripped by a volatile period of trading since the Russia-Ukraine crisis in late February. The EU is still debating a sixth package of sanctions on the OPEC+ producer, with diplomats trying to overcome objections from Hungary to a proposed ban on Russian crude. Some progress has been made, the Hungarian foreign minister said after recent talks.

A stubborn Covid-19 resurgence in China has further added to volatility. Virus lockdowns have strained the economy, while Chinese Premier Li Keqiang warned of a “complicated and grave” employment situation as Beijing and Shanghai tightened curbs in a bid to contain outbreaks.