By Adedapo Adesanya
Rumours that a deal on Iran’s nuclear activities could be signed within 72 hours sent oil prices lower on Thursday morning after reaching their highest in earlier trades.
Brent crude recorded a 2.19 per cent or $2.43 contraction to trade at $110.46 per barrel while the West Texas Intermediate retreated by 2.65 per cent or $2.57 to sell for $107.67 per barrel.
Traders reacted to the possibility that Iran could soon add more barrels to the market, which is very tight, with few buyers willing to take Russian crude after Putin invaded Ukraine.
In a tweet, Iranian journalist, Reza Zandi said – “I have received definitive news that within the next 72 hours, the nuclear deal will be signed in Vienna. Even if it might take a couple of days more or so, what appears to be certain is that the deal will be reached. #Iran’s #oil is returning to the market under golden circumstances.”
If Iran and the US return to the nuclear deal, the Joe Biden government is set to ultimately remove the sanctions on Iranian oil exports.
These additional barrels from Iran—estimated at around 1.3 million barrels per day —would be deeply needed on the market.
However, analysts believe that although the return of oil from Iran cannot replace the loss of Russia’s oil whose invasion of Ukraine has been driving the narrative for the commodity, sending prices surging but the Iran deal could be what will ease the very tight market.
The oil market was already tight prior to Russia’s invasion of Ukraine, and with countries now shunning oil from key producer Russia, traders are worried that supply shortfalls will follow.
Earlier in the week, Canada said it was banning Russian oil imports, but so far, it’s the only nation to target Russia’s energy directly.
There are projections that the assault on Ukraine will plunge Russian exports by one million barrels per day from the indirect impact of sanctions and voluntary actions by companies.
The Organisation of the Petroleum Exporting Countries and allies (OPEC+) agreed on Wednesday to stick to their plans for a modest output rise in April and kept mum on the Ukraine crisis during their talks.
