The Possible Return of Iranian Supply, Oil Prices Fall

On Thursday, Oil Prices were set to fall for the third day after diplomats said progress had been made toward an agreement to lift sanctions on Iranian, which could increase crude supply. Brent crude was trading at $65.66 a barrel, down $1.00 or 1.5 percent. Oil Prices in the United States fell 86 cents, or 1.4 percent, to $62.50 per barrel. In the previous session, both contracts dropped by about 3%.

European powers, the US, and Iran have made progress in talks over Tehran’s nuclear program, leading to lifting sanctions on Iranian oil. As the words came to a close on Wednesday, the EU official in charge said he was optimistic about the agreement being reached.

According to company officials and trading sources, Indian refiners and probably one European refiner are re-evaluating their crude purchases. They plan on buying Iranian oil in the second half of this year, expecting the lifting of US sanctions. PVM analysts said, “With global oil demand growth projected to be healthy for the balance of this year and in 2022 the (OPEC+) producer group is in a relatively comfortable position to deal with increasing Iranian output without undermining the oil rebalancing.”

Prices were also weighed down by concerns about the demand outlook in Asia. In India, nearly two-thirds of those screened have been exposed to the coronavirus. The prospect of the US Federal Reserve tightening policy has weighed on the outlook for economic growth, prompting some investors to reduce their exposure to oil and other commodities. Crude inventories in the United States rose by 1.3 million barrels last week, compared to analysts’ estimates of a 1.6 million barrel increase in a Reuters survey.