Oil prices were down early on Friday, headed for their first weekly decline in nine weeks, as reports intensify that an Iranian nuclear deal could be closer than ever.
As of 9:55 a.m. EST, the U.S. benchmark, WTI Crude, had fallen to below $90 a barrel, and traded at $89.85, down by 2.09%.
Early this week, WTI Crude hit $95 per barrel, and Brent Crude touched $96 on Monday amid market fears of an imminent Russian invasion of Ukraine and the possibility of disruption of Russian energy supplies to Europe. On Friday at 9:55 a.m., Brent Crude was down 1.76% at $91.33.
On Tuesday, oil prices tanked after Russia said some of its troops were returning to bases after finishing drills, but NATO and the United States later said they have not seen troops pulling from the Ukrainian border. Despite the reports of a broken ceasefire with both sides trading accusations, oil moved lower on Thursday and early on Friday on the prospect that an Iranian deal could be imminent.
Iran’s main negotiator, Ali Bagheri Kani, tweeted late on Wednesday:
“After weeks of intensive talks, we are closer than ever to an agreement; nothing is agreed until everything is agreed, though. Our negotiating partners need to be realistic, avoid intransigence and heed lessons of past 4yrs. Time for their serious decisions.”
In case a deal is reached—and the U.S. has said that the window of reaching an agreement is closing fast—Iran could return some 1.3 million barrels per day (bpd) to the market within several months after the U.S. lifts sanctions on its oil exports.
According to diplomats who spoke to Reuters on Thursday, a draft of an agreement being discussed would put the main sanction-lifting stage, including oil exports, at a later stage while releasing Western prisoners held in Iran and unfreezing Iranian funds would come first.
The Russia-Ukraine crisis is still a factor—a bullish one—for the oil market, but the bearish prospect of a return of Iranian oil exports took over market sentiment this week, alongside a general risk-off sentiment on markets.
By Tsvetana Paraskova for Oilprice.com