Oil falls on prospect of easing Iran’s oil sanctions

Crude oil storage tanks are seen from above at the Cushing Oil Hub in Cushing, Oklahoma March 24, 2016. REUTERS/Nick Oxford

MELBOURNE, Feb 18 (Reuters) – Oil prices eased on Friday after wild swings during the week as the prospect of additional supply from Iran returning to the market outweighed fears of a possible Russian invasion of Ukraine, which could interrupt the supply.

Brent crude futures were down 68 cents, or 0.7%, to $92.29 a barrel by 0124 GMT, extending a 1.9% decline from the previous session.

US West Texas Intermediate (WTI) crude oil futures lost 67 cents, or 0.7%, to $91.09 a barrel after falling 2% in the previous session.

Both benchmark contracts headed for their first weekly decline in nine weeks after hitting their highest levels since September 2014 amid a deal taking shape to revive Iran’s 2015 nuclear deal with world powers.

Diplomats said the draft deal outlines a sequence of steps that would eventually lead to the granting of exemptions from oil sanctions. That would put about 1 million barrels of oil per day back on the market, but the timing is unclear. Continue reading

“Nonetheless, the specter of a potential 1 million barrels a day hitting the oil market has caused Brent crude prices to come under pressure,” analysts at ANZ Research said in a statement.

Analysts don’t expect prices to fall sharply in the near term, even with the prospect of more Iranian oil returning, as the Organization of Petroleum Exporting Countries and its allies, collectively dubbed OPEC+, struggle to meet production targets.

“Oil markets are vulnerable to supply disruptions as global oil inventories hit near a seven-year low and OPEC+ reserve capacity is an issue amid disappointing OPEC+ supply growth,” Commonwealth Bank (CBA) analyst Vivek Dhar said in a statement.

With oil demand also recovering as air and road traffic picks up, CBA expects Brent to trade in the $90-$100 a barrel range in the near term and “quite easily” surpass $100 if tensions between Russia and Russia ease and Ukraine are escalating.

U.S. President Joe Biden will host a call on the Ukraine crisis Friday with leaders of Canada, France, Germany, Italy, Poland, Romania, Britain, the European Union and NATO, the office of Canadian Prime Minister Justin Trudeau said.

Reporting by Sonali Paul. Editing by Gerry Doyle

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