Crude oil prices dropped nearly 6 percent after Russia agreed to cut military operations in Kyiv and Chernhiv, while Ukraine proposed adopting a neutral status but with international guarantees that it would be protected from attack.

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Brent crude fell $6.51, or 5.8%, to $105.97 a barrel by 1342 GMT and US West Texas Intermediate (WTI) crude was down $6.41, or 6%, at $99.55. Both benchmarks lost about 7% on Monday.

"In order to increase mutual trust and create the necessary conditions for further negotiations and achieving the ultimate goal of agreeing and signing (an) agreement, a decision was made to radically, by a large margin, reduce military activity in the Kyiv and Chernihiv directions," Russian Deputy Defence Minister Alexander Fomin told reporters.

Fomin's statement comes on Tuesday after another round of talks Russia and Ukraine held in Istanbul and appears to be the first major concession the Russians made since the beginning of their invasion in Ukraine more than a month ago.

The Ukrainian general staff of the military said earlier it had noted withdrawals around Kyiv and Chernihiv.

Prices were also pressured on Tuesday by fears over Chinese demand after new lockdowns in Shanghai to curb rising coronavirus cases.

Shanghai accounts for about 4% of China's oil consumption, ANZ Research analysts said.

(With inputs from agency)

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(Edited by : Priyanka Deshpande)

First Published:Mar 29, 2022 7:55 PM IST