Oil pared its decline as traders weighed the potential for a resumption of the nuclear deal with Iran against the risk of disruption to Kazakh oil flows.
WTI for September delivery, which expires Monday, fell 1.7 per cent to $89.21/bbl. Brent for October settlement slid 1.2 per cent to $95.59/bbl at 10:03 a.m. in London.
Price have swung in a range of about $13 this month.
President Joe Biden spoke Sunday with leaders from France, Germany and the U.K. about reviving a nuclear deal with Iran, which could lead to returning supply from the OPEC producer. Meanwhile, there was the prospect of renewed interruptions to Kazakhstan’s Capsian Pipeline Consortium loadings after damage at two moorings.
Crude has given up all of the gains since Russia’s invasion of Ukraine in late February as fears over an economic downturn filtered through the oil market. On Monday, China was said to be planning a series of special loans to ramp up support for its beleaguered property market, the latest sign of the world’s largest oil importer moving to shore up its economy.
President Biden and his European allies discussed “ongoing negotiations” toward a nuclear agreement, including “the need to strengthen support for partners in the Middle East region,” according to a U.S. summary of the call released Sunday. Iran submitted its response on Aug. 15 to a framework circulated by the EU for a deal, which the EU took as constructive.
“We are in a macro-economic deteriorating situation with rising interest rates, droughts, China Covid-constraints, and an ugly energy crisis in Europe,” said Bjarne Schieldrop, chief commodities analyst at SEB AB, adding that the oil market appears to be putting a high probability on the chances of a resumption of the Iran nuclear deal.
While there are bearish risks from the potential return of Iranian supply, production in Kazakhstan continues to face disruption.
© 2022 Bloomberg L.P.