By Scott DiSavino
NEW YORK (Reuters) -Oil slid more than 2% on Tuesday from recent seven-year highs as the resumption of indirect talks between the United States and Iran could revive an international nuclear agreement and allow more oil exports from the OPEC producer.
A deal could return more than 1 million barrels per day (bpd) of Iranian oil to the market, boosting global supply by about 1%. The nuclear talks resumed in Vienna on Tuesday.
Brent futures fell $1.91, or 2.1%, to settle at $90.78 a barrel, while U.S. West Texas Intermediate (WTI) crude fell $1.96, or 2.1%, to settle at $89.36.
Both benchmarks, however, face extreme backwardation in coming months. Futures for Brent and WTI through July were in what Robert Yawger, executive director of energy futures at Mizuho, called "super-backwardation" with each month trading at least $1 a barrel below the prior month.
On Monday, Brent rose to $94.00 a barrel in intraday trade, its highest since October 2014. WTI hit $93.17 on Friday, its highest since September 2014.
"The U.S. government is attempting to tame oil prices by urgently negotiating a new nuclear agreement with Iran," said Louise Dickson, senior oil markets analyst at Rystad Energy.
Dickson said any Iran deal could unleash extra "crude and condensate production within four to six months, or even quicker as Iran is thought to have robust oil-on-water storage."
Eight rounds of indirect talks between Tehran and Washington since April have yet to bring an agreement on resumption of the 2015 nuclear pact. Differences remain over details of lifting sanctions.
"Exports could resume swiftly if a nuclear deal is reached," said Tamas Varga of broker PVM. "But it is a big 'if'. The re-emergence of Iranian barrels is only a possibility at this stage."
Oil prices have surged due to rising global demand, Russia-Ukraine tensions, supply disruptions from producers like Libya and a slow easing of 2020's record output cuts by OPEC+, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia.
U.S. oil production, meanwhile, will rise to 12.0 million bpd in 2022 and 12.6 million bpd in 2023 from 11.2 million bpd in 2021, the U.S. Energy Information Administration (EIA) said in its Short Term Energy Outlook (STEO) on Tuesday. That compares with the current record of 12.3 million bpd in 2019.
Oil came under further pressure from the prospect of an increase in U.S. crude inventories. Analysts expect the latest U.S. oil inventory data will show a 400,000-barrel increase in crude stocks in the week to Feb. 4. [EIA/S] [API/S] [ENERGYUSA] [ENERGYAPI]
The American Petroleum Institute (API), an industry group, will issue its inventory report at 4:30 p.m. EST (2130 GMT) on Tuesday. The U.S. EIA reports at 10:30 a.m. EST (1530 GMT) on Wednesday.
Prices were also dented on Tuesday when French President Emmanuel Macron said his meeting with Russian President Vladimir Putin helped prevent a worsening of the Ukraine crisis.
The Kremlin denied that Putin had promised Macron that Russia would stage no further maneuvers near Ukraine for now.
Six Russian warships were heading to the Black Sea from the Mediterranean for naval drills, the Interfax news agency reported, citing Russia's Defence Ministry, in what it called a pre-planned movement.