By Barani Krishnan
Investing.com – Oil prices tumbled for the first time in four days on signs Iran could have an imminent nuclear deal to legitimately bring its crude supplies back to a market that saw US crude hitting 2008 highs and Brent 2012 peaks earlier on Thursday amid the Ukraine war and sanctions on major oil exporter Russia.
U.S. crude’s West Texas Intermediate, or WTI, benchmark settled down $2.93, or 2.7%, at $107.67 a barrel.
It earlier surged to $116.57, its highest since September 2008, extending a three-day run-up on concerns that the sanctions on Russia could severely impact energy exports from a country that provides 10% of the world’s oil needs.
Along with WTI, global oil benchmark Brent settled down $2.47, or 2.2%, at $110.46 a barrel, also sliding for the first time in four days. Brent’s session peak of $119.78 was the highest since May 2012.
Oil’s retreat came after headlines suggesting brisk progress in talks between Iran and global powers to reactivate Tehran’s 2015 nuclear deal that could free the Islamic Republic itself from US sanctions on its oil.
Iranian media quoted Mikhail Ulyanov, Russia’s chief negotiator at the nuclear talks, as saying an agreement was likely over the next few days, paving way for the legitimate return of Tehran’s oil to the market.
Iran and the U.N. Security Council’s Five Permanent Members — the United States, Russia, China, Britain and France — along with Germany, originally agreed to a nuclear accord in 2015 that would allow Tehran to export oil so long as it did not develop atomic weapons.
But in 2018, the then US president, Donald Trump, pulled America out of the deal and unilaterally put sanctions on Iranian oil.
At stake for the global crude trade is the legitimate return of a million barrels or more of Iranian crude to the market — although Tehran is probably already exporting as much by evading the Trump-era sanctions on its oil which the Biden administration hasn’t shown much keenness in enforcing.
Iran’s crude exports were averaging 2.4 million barrels per day, with a peak of more than 2.8 million, before Trump’s move.
Thursday’s slide in WTI and Brent also came on the back of “some profit-taking because the price has risen so far so fast”, said Craig Erlam, analyst at online trading platform OANDA.
Both crude benchmarks had rallied about 30% over just three days of trading before the slide.