By Adedapo Adesanya
Oil prices continued their recent bearish trend as they fell more than 2 per cent on Thursday, May 20 after progress was made toward a deal that will see the United States lift sanctions on Iran, a move that will more crude enter the market.
Brent crude lost $1.67 or 2.97 per cent to trade at $64.99 per barrel, while the US benchmark, West Texas Intermediate (WTI) crude futures lost $1.41 or 2.23 per cent to sell at $62.05 per barrel.
Prices marked the third day of losses after Iranian President Hassan Rouhani in a television broadcast said that global powers taking part in the indirect US-Iranian talks on a return to the nuclear agreement had accepted that the US sanctions on Iran.
He said that sanctions on oil, shipping, petrochemicals, insurance and the central bank had been dealt with in the talks.
The report sent crude oil prices down as this means that the market would have more barrels of black gold entering the global market if the talks pull through.
Iran has already been boosting its exports and Indian refiners have signalled they would be willing buyers.
India’s largest refiner said it will definitely restart buying Iranian oil when US sanctions are lifted and this could mean trouble for other producers who supply India like Nigeria.
According to analysts, oil is in a holding pattern until June when Europe is going to start reopening and the US driving season will have officially kicked off, noting that between now and then, the main influences will be Iran headlines as a headwind.
Concerns about the demand outlook in Asia also dragged prices down as worry continues to hold nations like India, with almost two-thirds of people tested in the South Asian country showing exposure to the coronavirus.
The Organization of the Petroleum Exporting Countries (OPEC) said that a stark warning from International Energy Agency (IEA) to stop new fossil fuel funding could lead to oil-price volatility if it is acted on.
The IEA had earlier said investors should not fund new oil, gas and coal supply projects if the world wants to reach net-zero emissions by 2050.
Dipo Olowookere