Oil prices are falling on concerns about a possible return of Iranian supply



Oil prices fell Thursday but remained in the narrow range set this week. Optimism about the summer driving season in the US and Europe offset concerns about demand in India and a possible surge in Iranian supply.

Brent fell 57 cents, or 0.8%, to $ 68.30 a barrel by 0934 GMT, and US West Texas Intermediate (WTI) crude oil fell 55 cents, or 0.8%, to $ 65.66 a barrel.

“Despite supportive inventory data from the US on Wednesday, crude oil remains stuck in a sideways environment with Brent trading between $ 65 and $ 70 a barrel,” said UBS oil analyst Giovanni Staunovo.

U.S. crude oil, gasoline and distillate inventories all declined last week, the Energy Information Administration said, as a gradual lifting of coronavirus-related restrictions boosted demand for street fuel.

“Mobility data from Europe and the US benefiting from a rapid vaccine roll-out is price support, but I think market participants want more clarity on how the nuclear talks in Vienna are going, which limits prices,” added Staunovo.

Iran and the world powers have been negotiating in Vienna since April to work out steps Tehran and Washington must take to lift crippling sanctions against Iran, including its energy sector, over its nuclear program.

This will be a big topic for the next meeting of the Organization of Petroleum Exporting Countries and Allies called OPEC + on June 1, when manufacturers will have to consider whether to change their plans to ease production restrictions against the prospect of Iranian supplies Return to the market.

Analysts said that supply from Iran would only be increased gradually. JPMorgan estimates that Iran could add 500,000 barrels per day (bpd) by the end of this year and another 500,000 bpd by August 2022.

Japanese refineries will take at least three months to resume Iranian oil imports even if Iran’s nuclear talks lead to an agreement and lifting of sanctions, said Tsutomu Sugimori, president of the Petroleum Association of Japan (PAJ).

While the market was supported by an unexpectedly sharp decline in US oil inventories, concerns remain about falling demand in India, the world’s third largest consumer of oil.

A possible expansion of emergency COVID-19 measures in Japan has also fueled concerns over demand growth for the world’s fourth largest oil importer. Continue reading

Investors await data on US unemployment claims later in the day that will demonstrate the pace of US economic recovery during the pandemic.

Our standards: The Thomson Reuters Trust Principles.



Comments are closed.