Oil rises as extra supply from Iran looks unlikely

Tokyo — Oil prices rose on Tuesday, with Brent gaining for a fourth consecutive session, as the prospect of extra supply coming to the market soon from Iran faded with talks dragging on over the US rejoining a nuclear agreement with Tehran.

Brent crude was up by 17c, or 0.2%, at $73.03 a barrel by 3.47am GMT, having risen 0.2% on Monday. US oil gained 15c, or 0.2%, to $71.03 a barrel, having slipped 3c in the previous session.

Indirect discussions between the US and Iran, along with other parties to the 2015 deal on Tehran’s nuclear programme, resumed on Saturday in Vienna and were described as “intense” by the EU.

A US return to the deal would pave the way for the lifting of sanctions on Iran that would allow the Opec oil cartel member to resume exports of crude.

It is “looking unlikely that we will see the US rejoin the Iranian nuclear deal before the Iranian presidential elections later this week”, ING Economics said in a note.

Other members of Opec have been withholding output to support prices amid the pandemic.

“Additional supply from Opec will be needed over the second half of this year, with demand expected to continue its recovery,” ING said.

Still, prices were off their highs earlier in the day with US crude briefly tripping into negative territory.

“Daily technical indicators are pointing to crude oil in overbought territory and a pullback may be due,” said Avtar Sandu, senior manager commodities at Phillip Futures.

Investors and traders are also watching the outcome of the US Federal Reserve meeting that starts later on Tuesday for signals on when it will scale back monetary stimulus, he said.

The Fed is getting ready to debate how and when to start tapering a huge asset-purchase programme that helped support the US economy during the pandemic.

Reuters