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Oil slides from decade-highs as Iran talks kindle supply hopes

Commodities Mar 03, 2022 05:51PM ET
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2/2 © Reuters. FILE PHOTO: Oil barrels are pictured at the site of Canadian group Vermilion Energy in Parentis-en-Born, France, October 13, 2017. REUTERS/Regis Duvignau 2/2

By Marcy de Luna

HOUSTON (Reuters) - Oil slid 2% on Thursday, after hitting prices not seen in a decade, as sellers jumped on hopes the United States and Iran will agree soon on a nuclear deal that could add barrels to a tight global market.

Trade was volatile, with crude prices jumping early to multi-year highs on worries about disruption to Russia's exports, which at 4 to 5 million barrels per day (bpd) are more than any other nation other than Saudi Arabia. Following Russia's invasion of Ukraine, companies are shunning Russian supply and scrambling for barrels elsewhere.

Oil markets are in an "explosive mood” over increasing outrage against Russia, said Phil Flynn, an analyst at Price Futures Group. “People in the world don't want to deal with a country that is committing these atrocities in Ukraine.”

Brent futures were down $2.47, or 2.2%, to $110.46 a barrel, while U.S. West Texas Intermediate (WTI) crude fell $2.93, or 2.6%, to $107.67.

Both benchmarks rose to multi-year highs during the session, with Brent soaring to $119.84, its highest since May 2012 and WTI hitting its highest since September 2008 at $116.57.

Washington and its Western allies have imposed sanctions on Russia, but the measures have so far stopped short of targeting Russian oil and gas exports. A new round of sanctions announced by the White House on Wednesday banned export of specific refining technologies, making it harder for Russia to modernize oil refineries.

Traders remain wary of Russian oil. At least 10 tankers failed to find buyers on Wednesday, market sources said.

Canada said it will remove Russia and Belarus's most favored nation status as trading partners, and will provide additional military aid to Ukraine.

Global benchmark Brent has jumped nearly 25% since the Russian invasion of Ukraine on Feb. 24. Brent's six-month spread hit a record high of over $21 a barrel, indicating very tight supplies.

The United States and Iran have nearly completed negotiations on reviving a nuclear accord that could bring more than a million bpd of oil, or about 1% of global supply, back to the market. "We are close to a possible deal," Jalina Porter, the U.S. State Department's principal deputy spokesperson, told reporters.

Negotiations to revive the pact have been going on for 10 months in Vienna.

On Thursday a report by the International Atomic Energy Agency (IAEA), the U.N.'s nuclear watchdog, showed the stock of enriched uranium amassed by Iran was in breach of its 2015 nuclear deal, with the country nearing the ability to make a nuclear bomb.

The chief of the IAEA, Rafael Grossi, will visit Tehran on Saturday in an effort to resolve outstanding issues.

"Grossi's trip increases the odds of the revival of the (nuclear deal) to 70% from 60%," consultancy Eurasia Group said, noting "a deal is likely this month and as soon as the next several days."

That supply relief may only end up filling part of a gap left by buyers curtailing purchases of Russian oil, which accounts for about 8% of global oil exports.

"We expect that Russian oil exports will plunge by 1 million bpd from the indirect impact of sanctions and voluntary actions by companies," said Rystad Energy Chief Executive Jarand Rystad. "Oil prices are likely to continue to climb – potentially beyond $130 per barrel."

The Organization of the Petroleum Exporting Countries, Russia and their allies, a group known as OPEC+, on Wednesday stuck to an existing plan for a gradual output rise of 400,000 bpd a month, snubbing consumer calls for more.

Oil slides from decade-highs as Iran talks kindle supply hopes
 

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Comments (18)
Jim Morrison
Jim Morrison Mar 03, 2022 11:37AM ET
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Iran.....it's already priced in. they sell their oil now. so pathetic.
ali bakhshandeh
ali bakhshandeh Mar 03, 2022 11:37AM ET
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It sell indirectly and have a huge inventory onshore
Expressions Productions
Expressions Productions Mar 03, 2022 11:16AM ET
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So where are all the Iran bashers, its funny how two face West especially US is. Purely racists, oppurtunists and evil manipulation.
Arthur Timmins
Arthur Timmins Mar 03, 2022 11:16AM ET
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Rusdian oil should be cut off. Your comment is racist. Ignoraunt to always resort to use the race card to validate a point not telated. Manipulation, sure it hsppens. Not dure if its intentionsl here. However, one of least racist otherwise we would not allow so many immigtmrants. Outside of the west nations, no one would allow so mamy immigrants and are very racist. Its just ignored because the racist are not white. Most my friends are non white and they will tell you.. So stop abusing the race card. Its ignorat. And ukrain is more pressing right now thogh I agree, Iran is a huge danger to the world Democracy. All dictators are.
Jayaprakash Jp
Jayaprakash Jp Mar 03, 2022 11:16AM ET
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US is the only bully in the world. It has a authoritarian & colonial mindset under facade of a capitalist democracy. You bend rules & world order as per your convenience. Do not blame others. The way US behaves with other countries, it's really pathetic. The heights Hypocrisy is always seen with US. It has always been involved in all military actions in the world & whole sole responsible for all disasters in the world. List as belowGermanyVietnamJapanIraqSyriaSomaliaUkraine Taiwan.....the list goes on....shame on you....
Maximus Maximus
Maximus Maximus Mar 03, 2022 10:54AM ET
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Makes a lot of sense to get Iranian oil back on the market now. Besides it's only a restitution of the deal already in place before that useless trump weaseled out of it
Lion King
Lion King Mar 03, 2022 10:27AM ET
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Do you think Iran will support cheap Oil price ! they will use there money to attack others and will raise the oil price agin ....
Bhagwan Dass
Bhagwan Dass Mar 03, 2022 8:53AM ET
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Biden cheating people of world to get high crude oil prices. devil of the world
Lucky Man
Lucky Man Mar 03, 2022 8:52AM ET
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govt cannot even pressure OPEC weak biden...whole world is suffering on this price we just recover from pandemic and this is another pandemic war russia...communist country china (covid) russia (war) are headache on this planet
Miriam Morkhul
Miriam Morkhul Mar 03, 2022 8:41AM ET
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This is great for the planet.
Ying Yu
Ying Yu Mar 03, 2022 6:55AM ET
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Fundamental. It is no need for such a lot of oil in Covid pandemic. At least 50% US people are staying at home. Wall Street pumped it by propaganda and fake news
Александр Вожаков
Александр Вожаков Mar 03, 2022 4:17AM ET
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Oil is growing contrary to the logic of the market.
Brook Buck
Brook Buck Mar 03, 2022 12:17AM ET
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"U.S. strategic reserves dropped to a near 20-year low" and we are going into war. Well done...
 
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