Oil Retreats From Decade High as Iran Talks Revive Hopes of Oversupply

Oil fell 2 percent on Thursday, after hitting prices not seen in nearly a decade, amid selling on hopes that the United States and Iran will soon reach a nuclear deal that could contribute to increasing supply, which is currently suffering from tightness.

Trading was volatile, with crude oil prices jumping early to their highest levels in several years due to concerns about Russia, which exports between four and five million barrels per day of crude, and is the second-largest exporter in the world after Saudi Arabia. In the wake of Russia’s invasion of Ukraine, companies are shunning Russian supplies and scrambling to get oil from elsewhere.

Brent crude futures fell $2.47, or 2.2 percent, to $110.46 a barrel, while US West Texas Intermediate crude fell $2.93, or 2.6 percent, to $107.67.

Both benchmarks rose to multi-year highs during the session, with Brent crude rising to $119.84, the highest since May 2012, and WTI hitting its highest level since September 2008 at $116.57.

Washington and its Western allies have imposed sanctions on Russia, but the measures have so far not gone as far as targeting Russian oil and gas exports. A new round of sanctions announced by the White House on Wednesday have banned the export of certain refining technologies, making it difficult for Russia to modernize oil refineries.

Global benchmark Brent crude has jumped about 25 percent since Russia’s invasion of Ukraine on February 24, a measure Moscow calls a “special operation”.

Media reports indicated that the United States and Iran are close to completing an agreement that could bring more than one million barrels of oil, or about one percent of global supplies, to the market.

Negotiations aimed at reviving the agreement have been going on for ten months in Vienna. The diplomats are believed to be in the final stage of the talks.

But a report by the International Atomic Energy Agency showed on Thursday that Iran’s stockpile of enriched uranium was in violation of its 2015 nuclear deal.

The head of the International Atomic Energy Agency, Rafael Grossi, is scheduled to visit Tehran on Saturday in a bid to resolve the outstanding issues.