Oil Prices Declining Due to Fears of a Possible Return of Iranian Supplies

Oil prices fell on Thursday, May 27, but remained within their narrow range this week, as optimism about the summer driving season in the United States and Europe was met with concern about India’s demand and a possible increase in Iranian supplies.

Brent crude was down 57 cents, equivalent to 0.8%, to $ 68.30 a barrel, and US West Texas Intermediate crude fell 55 cents, or 0.8%, to $ 65.66 a barrel.

The Energy Information Administration said that US crude, gasoline and distillate stocks fell last week, as the gradual lifting of restrictions linked to the Coronavirus boosted demand for vehicle fuel.

Iran and world powers have been negotiating in Vienna since April to reach the steps that Tehran and Washington should take in order to lift the stifling sanctions imposed on Iran, which include its energy sector, over its nuclear program.

This will be one of the important issues that will be raised at the next meeting of the Organization of the Petroleum Exporting Countries and its allies, within the framework of the OPEC+ group, on the first of June, as producers will have to study whether they will change their plans to ease restrictions on production in the face of the possibility of returning Iranian supplies to the market.

At a time when the market is receiving support from the lower US oil inventories that exceeded expectations, there are still concerns about shrinking demand in India, the third largest consumer of oil in the world.

A possible extension of emergency measures linked to COVID-19 in Japan has also raised concerns about demand growth in the world’s fourth-largest oil importer.