Crude Oil Price Declines And Retreats On Possible Iran Supply Boost

The European Union late on Monday put forward a ‘final’ text to revive the 2015 Iran nuclear deal, awaiting approvals from Washington and Tehran

The oil market has remained under pressure recently over global recession fears, with Brent prices suffering their biggest weekly drop last week.

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Oil prices retreated slightly on Tuesday on the progress in last-minute talks to revive the 2015 Iran nuclear accord that would clear the way to boost its crude exports, new agency Reuters reported.

ANZ Research analysts said in a note, “The spectre of a US-Iran nuclear deal continues to hover over the market.”

The European Union late on Monday put forward a ‘final’ text to revive the 2015 Iran nuclear deal, awaiting approvals from Washington and Tehran. A senior EU official said a final decision on the proposal was expected within "very, very few weeks".

"While the details around the timing of the resumption of Iran's oil exports remain uncertain even if the accord is revived, there is certainly scope for Iran to increase oil exports relatively quickly," Commonwealth Bank analyst Vivek Dhar said in a note.

He said Iran could boost its oil exports by 1 million-1.5 million barrels per day, or up to 1.5 per cent of global supply, in six months. "A revival of the 2015 nuclear accord will likely see oil prices fall sharply given that markets probably don't believe a deal will be reached," Dhar said.

However, signs that demand may not be dented as much as feared are keeping a floor under the market for now, following stronger-than-expected trade data from China on the weekend and the surprising acceleration in US jobs growth in July.

According to the report, Brent crude futures declined 14 cents to $96.51 a barrel at 0404 GMT, cutting a 1.8 per cent gain from the previous session. US West Texas Intermediate (WTI) crude futures dropped 16 cents to $90.60 a barrel, after climbing 2 per cent in the previous session.

The oil market has remained under pressure recently over global recession fears, with Brent prices suffering their biggest weekly drop last week.

China, the world's largest crude oil importer, brought in 8.79 million barrels per day of crude in July, 9.5 per cent lower from a year earlier but up from June's import volumes, according to China's customs data.

Traders will also be watching out for weekly US oil inventory data, first from the American Petroleum Institute on Tuesday and then the Energy Information Administration on Wednesday.

According to Reuters' analysts poll, crude stockpiles fell by around 400,000 barrels and gasoline stockpiles declined also by about 400,000 barrels in the week to August 5, while distillate inventories, which include diesel and jet fuel, were unchanged.