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Oil heads for weekly fall, prospect of Iran deal stokes fears of additional supply: Reuters

NEW DELHI: Oil prices extended losses on Friday and were heading for a weekly fall as the prospect of additional supplies from Iran returning to the market outweighed fears of a possible supply disruption resulting from a Russian invasion of Ukraine, according to Reuters.

Brent crude futures fell 47 cents, or 0.5%, to $92.50 a barrel at 0410 GMT, extending a 1.9% decline from the previous session.

U.S. West Texas Intermediate crude futures fell 62 cents, or 0.7%, to $91.14 a barrel, after falling 2% in the previous session.

Both benchmark contracts hit their highest levels since September 2014 on Monday, but were heading for their first weekly decline in nine weeks amid reports of a deal taking shape to revive the 2015 nuclear deal between the Iran and the World Powers.

Diplomats said the draft agreement outlines a sequence of steps that would eventually lead to waivers from oil sanctions. That would bring about 1 million barrels of oil a day back to market, but the timing is unclear.

“The downward pressure on crude from the prospect of a deal is likely to continue…unless the parties end the latest round of stalled talks,” said Vandana Hari, founder of the oil provider. Vanda Insights oil market analysis, in a note. .

The fear premium of Ukraine’s crude stalemate is beginning to crumble, Hari added.

Still, analysts don’t expect prices to fall much in the near term, even with the prospect of more Iranian oil as the Organization of the Petroleum Exporting Countries and its allies, collectively called OPEC+, struggle to meet their targets. production goals.

“Oil markets are vulnerable to supply disruptions as global oil inventories sit near seven-year lows and OPEC+ spare capacity comes into question given the disappointing growth in OPEC+ supply,” Commonwealth Bank analyst Vivek Dhar said in a note.

With oil demand also picking up as air travel and road traffic picks up, the CBA sees Brent remaining in the $90-100/bbl range in the near term and breaking above $100 “fairly easily” if the Tensions escalate between Russia and Ukraine.

US President Joe Biden is due to hold a call on the Ukraine crisis on Friday with the leaders of Canada, France, Germany, Italy, Poland, Romania, Britain, the European Union and NATO, announced the office of Canadian Prime Minister Justin Trudeau.