Oil Eases as Investors Weigh Resumption of Iran Nuclear Talks

(Bloomberg) -- Oil fell for a second day as investors weighed the possibility that Iran may revive exports after a build in U.S. crude inventories.

West Texas Intermediate pared some earlier declines, but was still down for a second session. Iran and the European Union agreed Wednesday to restart negotiations on reviving the 2015 nuclear accord, with a precise date for talks to be announced in the next week. At present, Iranian crude exports are subject to U.S. sanctions and a deal could eventually clear the way for their revival.

The news followed a growth in U.S. crude inventories of 4.27 million barrels last week, according to Energy Information Administration data, although they slumped again at the key storage hub in Cushing, Oklahoma, the delivery point for WTI futures. 

Oil remains on track for a second monthly gain after hitting a seven-year high above $85 a barrel on Monday. Prices have been lifted by rising demand as pandemic curbs ease and amid a broader gas-centered energy crunch. At the same time, the Organization of Petroleum Exporting Countries and its allies have been restoring supply at only a modest pace. The potential return of Iranian barrels is one wild card that could cool the market, though it may yet take some time.

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“If the talks are resumed and turn out to be successful, it is still likely to be quite some time before any agreement is reached and Iranian oil exports return to the market,” said Carsten Fritsch an analyst at Commerzbank AG. 

Crude’s drop came amid signs policy makers are addressing the energy crisis. In Asia, China has taken steps to try to tackle a shortage of key raw materials including coal, while in Europe, Russian President Vladimir Putin ordered Gazprom PJSC to start refilling its European gas-storage sites.

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