【Ferro-alloys.com】Crude oil futures were lower in mid-morning Asian trade Feb. 21 after surging at the open as developments in the Russia-Ukraine crisis continue to drive sentiment, with Western leaders trying once again to reach a diplomatic resolution after escalating tensions over the weekend.

At 10:12 am Singapore time (0212 GMT), the ICE April Brent futures contract was down 69 cents/b (0.74%) from the previous close at $92.85/b, while the NYMEX March light sweet crude contract fell 57 cents/b (0.63%) at $90.50/b.

The front month ICE Brent contract had jumped by as much as $1.46/b, and the NYMEX crude contract by $1.86/b in early morning trade as reports of escalating tensions in the Russia-Ukraine crisis spooked markets.

US officials, including President Joe Biden, have said in recent days they believe Russian President Vladimir Putin has made the decision to invade Ukraine.

Nonetheless, last-ditch diplomatic efforts by European and US leaders indicated there was still room for a diplomatic resolution. French President Emmanuel Macron and Russian President Vladimir Putin on Feb. 20 agreed to trilateral talks aimed at preventing further escalation.

"The weekend brought a sharp deterioration in the Ukraine situation, setting the stage for a spike in crude at market open," Vandana Hari, CEO of Vanda Insights, said. "But that bullishness is now being reined in by reports that last-ditch attempts at a diplomatic solution have also reached fever pitch."

"The standoff is now at the height of volatility, and crude's roller-coaster may have some way to go before coming to a halt."

ING analysts Warren Patterson and Wenyu Yao in a Feb. 21 note said: "Whilst there is plenty of uncertainty about what Russia may do, there is even more uncertainty over how the West may respond. The US has suggested that it will retaliate with sanctions, however, it is unclear how far-reaching these would be or whether it would impact Russian crude oil exports."

The base case forecast by S&P Global Platts Analytics assumes that the Russia-Ukraine tensions will eventually subside and there would be no direct incursion by Russia into Ukraine, allowing prompt crude prices to shed an already priced-in risk premium of up to $20/b.

However, even a limited incursion by Russian forces into Ukraine that results in sanctions, could briefly send Dated Brent above $100/b and see it average around $95/b in 2022, an increase of $5-$10/b above reference case.

Under a full conflict scenario, Platts Analytics assumes much broader sanctions that would impact Russian exports of oil and natural gas. In this scenario Dated Brent would average $110/b for the remainder of the year.

US markets will be closed Feb. 21 for the Presidents Day holiday.

• [Editor:zhaozihao]