Oil Rises as Iran Reviews US Response to Nuclear Deal

By Adedapo Adesanya

Oil ended Wednesday higher on concerns that the United States will not consider additional concessions to Iran in its response to a draft agreement that would restore a nuclear deal.

This pushed the Brent crude higher by $1.00 to $101.22 per barrel and the US crude grew by $1.15 to $94.89 a barrel.

Iran said it had received a response from the United States to the EU’s “final” text for the revival of its 2015 nuclear deal with major powers.

Iran’s foreign ministry said on Wednesday, giving no firm indication of how close they are to narrowing the remaining gaps.

After 16 months of fitful, indirect US-Iran talks, with EU officials shuttling between the sides, the bloc had laid down a final text and expected a response within a “very, very few weeks.”

Iran noted that it will share its view with the EU, as the coordinator of the nuclear talks, upon completion of its review.

Earlier in the week, a US official said that Iran had dropped some of its main demands in negotiations to resurrect a deal to rein in the nuclear programme.

Prices also extended gains after the Energy Information Administration (EIA) reported a crude oil inventory decline of 3.3 million barrels for the week to August 19.

This compared with a draw of 7.1 million barrels estimated for the previous week by the Department of Energy agency.

A day before, the American Petroleum Institute (API) had estimated that crude oil inventories had shed 5.6 million barrels in the week to August 19.

In fuels, the inventory situation was a bit different. Gasoline inventories remained virtually unchanged and middle distillate inventories shed barrels in the week to August 19.

Suggestions that the Organisation of the Petroleum Exporting Countries (OPEC) could consider cutting output also boosted prices.

The idea was floated by the Energy Minister of Saudi Arabia, Prince Abdulaziz bin Salman, who called the current market situation in oil schizophrenic, noting the growing disconnect between physical and paper markets.

Speculators are also looking out ahead of Friday’s US Federal Reserve meeting whether the central bank is more likely to slow rate hikes or stay aggressive until it brings inflation down to its target of 2 per cent.