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Oil Down 3rd Straight Day as Iran Socks Crude Bulls With New Punch

CommoditiesMay 20, 2021 03:02PM ET
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© Reuters.

By Barani Krishnan

Investing.com - Broad risk aversion and Asian Covid explosions aren’t oil bulls’ only ills. Crude prices fell 2% on Thursday, slumping a third day in a row, after a fresh punch from an old nemesis: Iran.

World powers negotiating to bring Tehran back into a nuclear accord canceled by former U.S. President Donald Trump have accepted that major sanctions imposed since 2018 on the Islamic Republic’s crude exports be lifted, President Hassan Rouhani told Iranian television.

“Finer points” were being worked on to finalize a deal, Rouhani said, even as European diplomats insisted that success was not guaranteed and that tough issues remain.

At stake is an additional supply of some 500,000 to 2 million barrels per day of crude that could enter the market anytime between the next three to 18 months, those in the know say.

Iran has said previously that it could return “within months” to its peak oil production of nearly 4 million barrels a day once the sanctions on its oil 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.

West Texas Intermediate crude for July delivery, the benchmark for U.S. oil, settled down $1.41, or 2.2%, at $61.94 per barrel. It earlier fell to a 3-week low of $61.69.

July WTI lost 4.5% combined over two past sessions, bringing its week-to-date loss to 5.2%.  

“I expect to see a test of $60 and possibly a squeeze down to $58,” Adam Button, a commentator on ForexLive, said referring to July WTI.

“If it falls below $58 there (is) a possibility of a double top targeting $48-$50. That's a tough number to believe but anything is possible in the oil market.”

Brent crude for July delivery, which acts as the global benchmark for oil, settled down $1.55, or 2.3%, at $65.11. Brent slid to a 3-week low of $64.81 intraday.  

Week-to-date, Brent was also down 5.2%.

 

Oil Down 3rd Straight Day as Iran Socks Crude Bulls With New Punch
 

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Comments (11)
Jorden Hollingworth
JHJH May 21, 2021 4:05PM ET
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Market consensus already expects full return of Iranian barrels by next year. Timing is the issue at the margin but not trend changing. Jet demand will return and actually needs the additional production.
Alan Rice
Alan Rice May 20, 2021 6:27PM ET
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Do I have to write a book to explain why fossil resources are undervalued by an order of magnitude, base 10 (at least) ??
Me comment
Me comment May 20, 2021 6:27PM ET
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Yes please, should be a good comic book.
Dirk Peter van Dellen
Dirk_P May 20, 2021 6:22PM ET
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Should be no deal with Iran, one should not make deals with countries like that. Period times two ..
Shazam
Shazam May 20, 2021 5:54PM ET
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Iran is gonna have more money to supply Hamas with military equipment. Really good deal. Bruh.
Edgar Wilkinson
Edgar Wilkinson May 20, 2021 5:39PM ET
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This may or may not happen. Get the price back to where it was day before yesterday.
Louis Lipps
Louis Lipps May 20, 2021 5:15PM ET
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$48-50 get off the crack pipe dude.
Gene Kret
Gene Kret May 20, 2021 5:04PM ET
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Listen up people. If the demand of oil globally goes up then producers will increase production. So, who cares if Iran or Lib or whoever puts oil on the market, at the end of the day the cartel (s) will inflate the price since SUMMER IS COMING!! Iran will develop a nuc and Israel will bomb them (or the Saudi’s.) Lets face it no likes Iran, they will sell cheap oil to China and India. Those markets are going to need more demand anyway. Nothing changes!! Now go out and buy UCO calls at 85 - 95 Strike!!!
Ali Aghaei
Ali Aghaei May 20, 2021 4:06PM ET
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Iran is a politically unstable country in the Middle East. Any agreement will lead to the rise of the ruling regime in Iran.
Alberto Vazquez
Alberto Vazquez May 20, 2021 3:36PM ET
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bomb iran
Jim Herndon
Jim Herndon May 20, 2021 3:36PM ET
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Yes!!!!!!!!!!!!!!
Iman Sedighi
Iman Sedighi May 20, 2021 3:36PM ET
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Santosh Kunwar
Santosh Kunwar May 20, 2021 3:29PM ET
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no not there will third world war.
Josef Derzavich
Josef Derzavich May 20, 2021 3:21PM ET
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is there no limits to imbecility? give Iran 250,000, 000 and lets observe third world war erupt like Krakatoa and destroy the Middle East
 
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