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Crude Oil Lower; Iranian Talks Could Lead To Extra Supply

Commodities Feb 17, 2022 09:40AM ET
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By Peter Nurse   

Investing.com -- Oil prices weakened Thursday as talks to resurrect the Iranian nuclear deal appeared to be heading in the right direction, but losses were trimmed by the renewed tensions on the Ukrainian border. 

By 9:20 AM ET (1420 GMT), U.S. crude futures traded 2.6% lower at $91.22 a barrel, while the Brent contract fell 2.6% to $92.38.

U.S. Gasoline RBOB Futures were down 2.7% at $2.6059 a gallon.

Delegates from France stated Wednesday that a decision regarding the nuclear deal limiting Tehran’s nuclear capabilities was only days away, a sentiment that the U.S. agreed with. State Department spokesperson Ned Price said the United States is in "the midst of the very final stages" of indirect talks with Iran.

While doubts still remain about whether Iran will make the political choice to sign a deal with the West, an agreement would potentially allow the Persian Gulf country to resume exporting its crude output to the global market by the removal of U.S.-imposed sanctions.

“If we are to see a lifting of sanctions, it would help ease some concerns over the ability of OPEC to increase output. Iran is currently producing at around 2.5MMbbls/d but is estimated to have a capacity of closer to 3.8MMbbls/d,” said analysts at ING, in a note, “Therefore, over time there is the potential for 1.3MMbbls/d of additional supply to come onto the market.” 

That said, the tensions in Eastern Europe over a potential invasion of Ukraine by Russia continue to provide support for the market, given the potential disruption of gas supplies to Western Europe, in particular. This would mean that these countries have to seek different sources for their energy demands.

Doubts have emerged about the veracity of Russia’s claim earlier this week that it was withdrawing some of its troops that had been gathering near the Ukraine border, with the U.S. calling the claim “false”, saying Russia is actually increasing its troop numbers.

Additionally, Russian-backed rebels in eastern Ukraine accused government forces of shelling their territory with mortars. Ukraine's military denied the accusations, saying it was the other side that committed the act of aggression.

Such incidents have become reasonably common during the eight years of this conflict, but this is the type of event that the West fears could be used by Moscow as a reason to invade.

“There still appears to be a fairly large risk premium priced into the market,” ING added.

 

Crude Oil Lower; Iranian Talks Could Lead To Extra Supply
 

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Comments (6)
Robert Murphy
Robert Murphy Feb 17, 2022 12:53PM ET
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I’m thinking about Iran this way. What will China allow them to do since they’re buying up all of Iran’s oil. Keep the Status quo, or allow a trade deal on their oil? I’m having a hard time believing China has absolutely no sway over them.
Royce Murph
Royce Murph Feb 17, 2022 12:53PM ET
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Amen
Ac Tektrader
Ac Tektrader Feb 17, 2022 12:47PM ET
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so far biden has done a good job of getting some important work done for the country without a lot of embarrassed to the country unlike the last administration. he was handed a mess and has tried to keep things moving in the right direction. unfortunately most of the problems were created by a pandemic and the incompetence of the last presidentcy and it's administration; it will take time and a friendler Congress to fix those problems.
Royce Murph
Royce Murph Feb 17, 2022 12:47PM ET
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LMFAO, are you kidding me.
Ac Tektrader
Ac Tektrader Feb 17, 2022 12:35PM ET
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equities still in danger of a serious break over the next few trading days, historically in the beginning of bear markets a bad Friday can signal a worse Monday.
Ac Tektrader
Ac Tektrader Feb 17, 2022 12:21PM ET
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technically. crude looks like a short down to 85 and change, with a tight stop.
Royce Murph
Royce Murph Feb 17, 2022 12:21PM ET
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No it doesnt technically.  The only way that would happen would be Iran deal or Russia not invading Ukraine
MuraliKrishna Brahmandam
MuraliKrishna Brahmandam Feb 17, 2022 10:10AM ET
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Oil is caught between Jerome Bubble and Jerome Powell and PMUBTSIN
Butch Einsel
Butch Einsel Feb 17, 2022 9:58AM ET
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Biden administration grabbing at straws again to help his failed policy , staying long oil equity, now they want to give into the Iranians , can't help but wonder what Israel has to say about it.
Royce Murph
Royce Murph Feb 17, 2022 9:58AM ET
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Exactly!! Iran has its own problems pumping oil.  I laugh at these articles as they have zero clue.  Iran has been all along selling oil to China and others, this will make zero impact on the oil supply issue.
Ac Tektrader
Ac Tektrader Feb 17, 2022 9:58AM ET
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Iran will increase crude production and move most of that production to the European markets. It will effect pricing.
Royce Murph
Royce Murph Feb 17, 2022 9:58AM ET
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Ac Tektrader  Iran, doesnt have the capacity to increase production.  They can hardly keep up now with their aging infrastructure that keep breaking.. Do you research before you type..
 
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