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Oil Down 2% on Talk of Imminent Deal for Iran to Export Crude Again 

CommoditiesApr 21, 2021 03:53PM ET
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© Reuters.

By Barani Krishnan

Investing.com - Oil prices fell as much as 2% on Wednesday on talk of a nuclear deal by May for Iran that would take U.S. sanctions off the Islamic Republic’s crude exports, potentially adding another two million barrels per day or more to the market.

Crude futures were already down earlier in the day after a somewhat bearish weekly dataset on petroleum supply-demand released by the U.S. Energy Information Administration. 

Further depressing the market was news from wire agencies that indirect talks between Iranian and U.S. negotiators, held in Vienna through European intermediaries, were bearing fruit.

“The Biden administration has signaled it is open to easing sanctions against critical elements of Iran’s economy, including oil and finance, helping narrow differences in nuclear talks,” Reuters reported, quoting sources involved in the talks. “Progress has come as the U.S. laid out more clearly the contours of the sanctions relief it is prepared to provide”.

The report added that the United States was open to lifting terror sanctions against Iran’s central bank, its national oil and tanker companies and several key economic sectors including steel, aluminum and others.

It also quoted Russia’s ambassador to the United States as saying that the negotiations could be completed by late May, when an agreement ensuring continued International Atomic Energy Agency oversight of Iran’s nuclear activities expires.

New York-traded West Texas Intermediate, the benchmark for U.S. crude, settled down $1.32, or 2.1%, at $61.35 per barrel. It fell to a session low of $60.87 earlier.

London-traded Brent, the global benchmark for crude, settled down $1.25, or 1.9%, at $65.32. Brent fell to as low as $64.96 earlier.

Iran has said that it could return “within months” to its peak oil production of nearly 4 million barrels a day once the sanctions on its oil — imposed by former U.S. president Donald Trump in 2018 — are lifted. Sources familiar with the country’s crude output currently estimated its production at around 2 million barrels daily. 

Analysts say the additional supply from Iran, whenever that comes, will force a reconfiguration of global oil supply that could be more bearish than bullish — especially with questions about demand resurfacing after new coronavirus flare-ups in No. 3 oil consumer India.

Oil prices fell to historic negative pricing of minus $40 per barrel in April 2020 at the height of the demand destruction caused by the Covid-19 pandemic. Production cuts since by the OPEC+ producer alliance has helped the market come back, with the rebound accelerating after vaccine breakthroughs for the virus in November.

The 23-member OPEC+ — comprising the original 13 members of the Saudi-led Organization of the Petroleum Exporting Countries and 10 other oil producing nations steered by Russia — decided at the beginning of this month to raise production after withholding at least seven million barrels per day from the market over the past year.

OPEC+ plans to pump an additional 350,000 barrels per day in May and June, and a further 400,000 daily in July.

It is not known if it will proceed with those plans if Iran gets its nuclear deal by May.

Oil Down 2% on Talk of Imminent Deal for Iran to Export Crude Again 
 

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Comments (16)
John Groeschel
John Groeschel Apr 21, 2021 6:06PM ET
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And the methodical plan to destroy US oil production and frackers continues...nothing like returning to being a slave to the middle east...it will be please sell me cheap oil after they fully destroy the fracking industry...
Ernest Wong CA
Ernest Wong CA Apr 21, 2021 4:53PM ET
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All cheap talks here, as a trader all I know is profit, profit and profit! :P
Nelson isaac
Nelson isaac Apr 21, 2021 4:53PM ET
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am new is trading app help me to profit
vince smith
vince smith Apr 21, 2021 4:46PM ET
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let me guess Iran will need to sell their oil using the petro dollar, or no agreement will be made. It has nothing to do with nuclear weapons but everything to do with America getting her cut. Mafia tactics
Sereberz Adam
Sereberz Adam Apr 21, 2021 4:46PM ET
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there is no such a thing. us concern is Iran destabilizing middleeast, and having nuclear power which is likely to cause a war. to avoid future war, USA have to slow down Iran
vince smith
vince smith Apr 21, 2021 4:46PM ET
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the only thing the US is worried about is the petro dollar, no petro dollar no USA. No Saudi Arabia no petro dollar Israel is the only one slowing down Iran's nuclear program. I hope they continue to succeed, but don't be fooled its all about the almighty dollar.
Ronald Warren
Ronald Warren Apr 21, 2021 3:53PM ET
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Oil sells off because of an increase in Iranian production. under Biden's nose, they've already increased to 90% production. The market will not get flooded with oil.
SunilKumar Dixit
SunilKumarDixit Apr 21, 2021 3:53PM ET
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Ronald Warren. Iran's increased output coming to open markets will increase the total supply and availability which eventually has a comforting impact on prices.
Gene Kret
Gene Kret Apr 21, 2021 3:53PM ET
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How many F35s does Isreal have......
Steve Lora
Steve Lora Apr 21, 2021 3:43PM ET
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The gas station owners don't seem to be getting the memo.
Gene Kret
Gene Kret Apr 21, 2021 3:43PM ET
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Its the government tax which is adding to the ppgal. The price at the pump must go up as the number of EVs hit the road. Ask yourself “how” is the government going to make up the loss in taxes as the number of EVs hit the road?
Gene Kret
Gene Kret Apr 21, 2021 2:54PM ET
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Sleepy Joe is well simply put has water on the brain. Once Iran is Nuc capable there will be no stopping them. They will use it.
Titus Pullo
TitusPullo13thhh Apr 21, 2021 2:54PM ET
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No they wont. Each regime, especially an authoritarian one is ***bent on its survival. Why would the Iranian regime as crazy as they sound, risk annihlation by using nukes? Its just a deterrence. The only thing keeping India and Pakistan from *******each other is nukes!
SunilKumar Dixit
SunilKumarDixit Apr 21, 2021 2:54PM ET
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TitusPullo. You said it right mate. Nukes work as effective deterrent.
Lars Hellman
LarsH Apr 21, 2021 2:27PM ET
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Better sell nukes to Iran to stop US/NATO from humanitarian bombing in the Midle East.
ben sc
ben sc Apr 21, 2021 2:06PM ET
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Isn't Biden admin contributing to climate change if they encourage crude production in Iran? How can climate change be such a crisis yet this admin is pushing foreign producers to increase production? Iran should be building solar panels!
Benjamin McIntire
Benjamin McIntire Apr 21, 2021 2:06PM ET
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Nuclear non proliferation beats out many things.
Gene Kret
Gene Kret Apr 21, 2021 2:06PM ET
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Benjamin McIntire your just not real bright are you Ben
Notvery Goodathis
Peteymcletey Apr 21, 2021 2:01PM ET
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Oil tankers biggest winners
Notvery Goodathis
Peteymcletey Apr 21, 2021 2:00PM ET
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lol. cave. hope they don't do something. they'll say they aren't. but they will anyways
william pheagane
william pheagane Apr 21, 2021 1:56PM ET
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which CFDs and currency pairs will be affected?
Guljan Khuralgan
Guljan Khuralgan Apr 21, 2021 1:56PM ET
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william pheagane
william pheagane Apr 21, 2021 1:55PM ET
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which CFDs and currency pairs will be affected?
Mikal FriisHenriksen
Mikal FriisHenriksen Apr 21, 2021 1:51PM ET
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Gols, SILVER OBS; USA IS ON A BUYINGSTREAM OF SILVER
Lyin Lat
Lyin Lat Apr 21, 2021 1:49PM ET
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morboit
danny Levine
danny Levine Apr 21, 2021 1:47PM ET
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good. high gas prices hurt consumers too much
 
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