Oil Prices Drop $1 amid US-Iran Nuclear Deal Expectations
TEHRAN (Tasnim) – Oil prices declined sharply on Thursday as prospects for a renewed US-Iran nuclear agreement and an unexpected rise in US crude stockpiles raised fears of oversupply.
Brent crude futures dropped $1.49, or 2.3%, to $64.60 per barrel by 0405 GMT.
US West Texas Intermediate (WTI) crude futures fell $1.46, or 2.3%, to $61.69 per barrel.
Market sentiment weakened as investors reacted to reports indicating potential progress in nuclear negotiations between Tehran and Washington, according to Reuters.
Such a deal could lead to the lifting of sanctions and the return of Iranian oil to global markets.
At the same time, a surprise increase in US crude inventories last week added to supply concerns.
Analysts said the inventory build reinforced bearish sentiment already driven by geopolitical developments.
"Fresh selling was triggered by expectations that a US-Iran nuclear deal would ease recently tightened US sanctions on Iran, potentially loosening the global crude supply-demand balance," said Yuki Takashima, an economist at Nomura Securities.
Saudi Arabia fully supports the US-Iran nuclear talks and hopes for positive results, the kingdom's foreign minister Prince Faisal bin Farhan Al-Saud said on Wednesday.
Washington issued fresh sanctions against Iran on Wednesday following Tuesday's sanctions on some 20 companies in a network that the US Treasury Department claimed has long sent Iranian oil to China.
The sanctions came following a fourth round of US-Iran talks in Oman.
The surprise rise in US inventories overnight is also weighing on prices as is profit taking after crude oil rebounded towards the top of its recent $55-65 per barrel range, said Tony Sycamore, an analyst at IG.
