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Oil Down 2% on Looming Iran Deal; Russia-Ukraine Limits Loss

Commodities Feb 17, 2022 04:02PM ET
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© Reuters.

By Barani Krishnan

Investing.com  -- Iran or Russia? Make your pick.

Oil traders went broadly for the first of the two factors in Thursday’s trade, sending crude prices down 2% on the prospect that Tehran could soon resume its nuclear pact with world powers and rescind U.S. sanctions that could legitimately return a million new Iranian barrels or more to the world market. 

But oil’s losses on the day were still limited by escalating Russia-Ukraine tensions, which reached fever-pitch on Thursday on reports of shelling in Eastern Ukraine which were not necessarily related to the conflict between the two sides, said those in the know.

Away from the stand-off point at Ukraine’s borders, Russia continued to engage in a verbal war with the United States and Western allies of Ukraine, which it accused of aggravating the conflict. Washington and its NATO partners, meanwhile, accused Moscow of just waiting for the right moment to invade Ukraine and creating all sorts of pretexts to achieve that.

“There are just so many unknowns in the Russian-Ukraine stand-off that each trade might not last beyond the next headline,” said John Kilduff, partner at New York energy hedge fund Again Capital. “Given this extremely challenging circumstances and volatility, traders have opted to keep a limited risk upside on oil — i.e. $90 support — while focusing on the ‘now’ in the trade, which is the possibility of the Iran deal.”

New York-traded West Texas Intermediate, the benchmark for U.S. crude, settled down $1.90, or 2%, at $91.76. 

London-traded Brent, the global benchmark for oil, settled down $1.84, or 1.9%, at $92.97. 

Reuters, reporting on a draft it obtained on the tentative Iranian deal, said there would be various phases to bring Tehran back into compliance with its 2015 nuclear agreement with world powers. 

It also said some $7 billion in Iranian funds stuck in South Korean banks under U.S. sanctions could be unfrozen first, before the sanctions themselves are removed, allowing Iran to freely trade its oil but with continued surveillance of its nuclear capabilities.

No timelines had been drawn yet for any of these, though the need for a deal was urgent, Reuters said.

 

Oil Down 2% on Looming Iran Deal; Russia-Ukraine Limits Loss
 

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Comments (6)
Joel Schwartz
Joel Schwartz Feb 17, 2022 8:13PM ET
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Natural gas is a penny stock
Shep De
Shep De Feb 17, 2022 6:54PM ET
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Yay, let Iran get more nuclear to save your presidency, Biden.We KNOW that's it. Inflation about to roto you and your party a new one, thing is, consumer has 167 TRILLION WEALTH so they'll just spend money other ways, not tech so much, consumers FED up with it from Covid lockdown 2020 then, Delta, Oct. 21 and Omicron in Nov., Dec. That's it.
Prakash J Chaudhari
Prakash J Chaudhari Feb 17, 2022 4:13PM ET
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Wall street is cashing on fear - small traders have no place to hide. News are manufactured - solution of ukraine is easy - Make it buffer state and have agreement of free trade with Russia . You need russia to defeat China - period
bret again
bret again Feb 17, 2022 4:13PM ET
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Not so easy Prakash, see there are a few catches… I think gazprom(russia) owes Ukraine $3B for Crimea arbitration settlement, they took some of their land and equipment in 2015, displaced 1.5M people, lost in arbitration and havn’t paid up. And then, russia is also backing the seperatists, kind of an ongoing war situation… and mostly, there are a few big gas execs russian/german/israeli/French/etc… that really want to maintain control of gas flow to europe, and Ukraine would offer an alternative route for the west… so, not a political issue, a business issue, and by now we all know Russia’s go to negotiation tactics, which is, just take what they want…
Anony mous
An0nym0us Feb 17, 2022 4:02PM ET
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I don't know what any of this means. I clicked the link because I'm trying to see if there's a pattern between war news / propaganda and oil prices compared to stocks.
Barani Krishnan
Barani Krishnan Feb 17, 2022 4:02PM ET
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This is the oil market narrative. If you are lost, you'll might be glad to know that thousands of other traders are, like you. It hasn't to do with the information the media is providing but rather the mixed messaging from all the GOVERNMENTS involved in this. Best of luck.
Barani Krishnan
Barani Krishnan Feb 17, 2022 4:02PM ET
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“There are just so many unknowns in the Russian-Ukraine stand-off that each trade might not last beyond the next headline,” said John Kilduff, partner at New York energy hedge fund Again Capital. “Given this extremely challenging circumstances and volatility, traders have opted to keep a limited risk upside on oil — i.e. $90 support — while focusing on the ‘now’ in the trade, which is the possibility of the Iran deal.”
Fraz Zaka
Fraz Zaka Feb 17, 2022 4:01PM ET
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What will it makes effect on gold?
احمد احمد
احمد احمد Feb 17, 2022 3:54PM ET
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