Oil Rises Amid Conflicting Reports on US-Iran Nuclear Talks
Oil edged higher as traders parsed conflicting reports on the status of nuclear talks between the US and Iran, clouding the outlook on whether Washington will proceed with military strikes against the major oil producer.
West Texas Intermediate rose 3.1% to settle above $65 a barrel. Prices pared gains in post-settlement trading as Iranian Foreign Minister Abbas Araghchi confirmed in a social media post that the negotiations will be held in Oman on Friday.
WTI for March delivery edged up 3.1% to settle at $65.14 a barrel in New York.
Brent for April settlement increased 3.2% to settle at $69.46 a barrel.
The commodity surged earlier on reports that the US told Iran it will not agree to Tehran’s demands to change the location and format of talks planned for Friday, Axios said, citing two US officials. Adding to bullish momentum, US President Donald Trump said that Iran’s Supreme Leader Ayatollah Ali Khamenei “should be very worried” in an interview with NBC.
Traders have been closely monitoring the risk of possible US military intervention in Iran, which could disrupt key shipping lanes as well as the country’s roughly 3.3 million barrels-per-day oil production.
Doubts over whether talks surrounding Iran’s nuclear program would proceed as planned have intensified since Tuesday, when US and Iranian forces appeared to square off in the sea and air. An Iranian drone approached an American aircraft carrier in the Arabian Sea and was shot down just hours after a US-flagged oil tanker was hailed by small armed ships in the Strait of Hormuz off Iran’s coast.
Concern over a potential conflict in the Middle East, a source of about a third of the world’s crude, helped lift prices last month despite signs of a growing oversupply. Its also kept the cost of bullish options high relative to bearish ones for the longest stretch in more than a year.
“Geopolitical tensions are really driving it,” Equinor Chief Financial Officer Torgrim Reitan said in a Bloomberg TV interview. “The underlying balance is a lower price than there is today, but with everything going on it’s very hard to say where this will end.”
Meanwhile, US crude inventories fell by 3.5 million barrels last week, according to the Energy Information Administration. That’s significantly smaller than a forecast by a closely followed industry report, subduing the market’s reaction.
Source: Bloomberg
