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NEW YORK – Crude prices closed down after nearing six-month lows yesterday as oil bulls feared that Iran might win back its stalled nuclear deal from global powers to pave its re-entry into the export market for oil, reported Sputnik.
Oil’s slide from 14-year highs hit in March also prompted Organisation of the Petroleum Exporting Countries (Opec) leader Saudi Arabia to hint at production cuts if the market kept tanking.
“The paper and physical markets (for oil) are increasingly disconnected,” Saudi Energy Minister Abdulaziz bin Salman said shortly after the benchmark for US crude came less than a dollar from revisiting today’s low of under US$86 (RM383.30) per barrel.
Abdulaziz, who is chair of the 13-member Opec and its 10 allies led by Russia, said the extended Opec+ group may need to “tighten output in order to stabilise the market.”
Opec+ has been raising production over the past year since slashing them from May 2020 in the aftermath of the coronavirus breakout that decimated demand for oil. While this year’s production hikes were initially insulated by the Ukraine-invasion highs, Opec+ has become more vulnerable since the market downturn that began in May.
In yesterday’s session, WTI settled down 54 cents, or 0.6%, at US$90.23 a barrel. It fell to as low as US$86.30 earlier in the day. WTI is down almost 10% since the start of August, extending the back-to-back loss of more than 7% in July and June.
Brent, the London-traded global benchmark for crude, settled down 24 cents, or 0.3% at US$96.48. Brent’s session low was US$92.37. Brent is down more than 12% since the start of August, after a 6.5% drop in July and a slide of more than 4% in June.
Crude prices had their last monthly gain in May. Their biggest rally for the year was in March when WTI reached US$130.50 while Brent almost touched US$140 in the aftermath of the Ukraine conflict.
Monday’s drop in oil prices came amid renewed momentum for reports from last week suggesting that Iran and the European Union were close to reviving a 2015 nuclear deal for Tehran that would lift White House sanctions on the Islamic Republic’s oil.
The US State Department, responding to the speculation, confirmed in a statement yesterday that Washington and Tehran were closing in on a deal.
“A nuclear agreement is now closer than it was two weeks ago,” the department said, adding, however, that “there are still issues that need to be resolved” in getting Iran back on the path of nuclear non-proliferation and legitimising its oil exports. – Bernama, August 23, 2022