Oil fell on Tuesday after President Vladimir Putin said Russia would only use military force in Ukraine as a last resort, releasing some tension from a growing crisis in the region that pushed prices to five-month highs in the previous session.
Putin said Russia reserved the right to use all options to protect Russian citizens in Ukraine, but he ordered troops engaged in military exercises near the Ukraine border back to their bases, triggering a retreat in oil prices that had been boosted by worries the conflict would continue to escalate.
April fell $2 to near $109 a barrel, after briefly falling $2.09 after Putin's remarks. The European benchmark ended the previous session at its highest close this year. U.S. crude for April delivery fell by $1.59 to settle at $103.33, after rising to $105.22 on Monday, the highest level since September.
Putin's statements raised investors' hopes for a peaceful resolution with Ukraine. The crisis caused a sell-off in global equities on Monday as investors worried the oil supply from Russia, the world's second-biggest crude oil exporter, could be disrupted or subject to sanctions.
Imports of Russian oil are so crucial for Europe that it is unlikely sanctions will be imposed, said Seth Kleinman, head of energy research at Citigroup. Russia paid a heavy financial price on Monday for its military intervention in Ukraine. Stocks, bonds and the rouble plunged as investors dumped riskier assets in favour of commodities such as gold and oil.
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