Oil stabilizes after swings with Ukraine crisis, Iran nuclear talks weigh on it

An oil pump at sunset outside Schebenhard, near Strasbourg, France, October 6, 2017. REUTERS/Christian Hartmann

MELBOURNE (Reuters) – Oil prices eased after an initial fluctuation on Monday, as investors looked for contradictory scenarios for a tightening of Russian energy supplies due to the Ukraine crisis and more crude entering the market over a possible nuclear deal between Iran and world powers. .

Brent and US West Texas Intermediate (WTI) crude futures rose more than $1 a barrel in early Asian trading, and later turned nearly $1 on news of a possible US-Russia summit.

US President Joe Biden and Russian President Vladimir Putin have agreed in principle to hold a summit on Ukraine, the office of French President Emmanuel Macron said in a statement on Monday. Read more

Brent crude futures were at $93.39 a barrel at 0445 GMT, down 15 cents, or 0.2%, after touching $95 earlier, while US West Texas Intermediate crude futures rose 7 cents to $91.14 a barrel, from an earlier high. at $92.93. US markets will be closed Monday for the President’s Day holiday.

Oil markets have been nervous over the past month amid fears that Russia’s invasion of its neighbor could disrupt crude supplies, but price gains have been limited by the prospect of more than 1 million barrels per day of Iranian crude returning to the market.

A senior European Union official said on Friday that a deal to revive the 2015 Iran nuclear deal is “very close”.

Analysts said the market remains tight and any addition of oil will help, but prices will remain volatile in the near term as Iranian crude is likely to return later this year.

“There’s a lot of pressure in geopolitical terms, and it’s hard to know the answer (to market moves) – with Ukraine and Iran,” said National Australia Bank commodity analyst Baden Moore.

European Commission President Ursula von der Leyen said Russia would be cut off from international financial markets and block access to key exports needed to modernize its economy if it invaded Ukraine. Read more

“If a Russian invasion happens as the US and UK have warned in recent days, Brent crude futures could rise above $100/barrel, even if an Iran deal is struck,” Commonwealth Bank analyst Vivek Dar said in a note.

Analysts at Singapore’s OCBC Bank said Brent crude could test $100 in the short term, possibly before the end of the first quarter.

Despite the possibility of oil reaching $100, ministers of Arab oil-producing countries said on Sunday that OPEC+ should stick to its current agreement to add 400,000 barrels of oil per day each month for production, rejecting calls to pump more to ease pressure on prices. Read more

To avoid a surge in prices, RBC Capital analysts said the White House is expected to prepare significant strategic petroleum reserves (SPR) coordinated through the International Energy Agency.

“We expect the US Strategic Petroleum Reserve release to be larger than the November release, and more nice barrels could be delivered this time through direct selling,” RBC Capital said in a note.

(Reporting by Sonali Paul and Florence Tan) Editing by Sam Holmes, Shivani Singh and Muralikumar Anantharaman

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