Futures in New York fell as much as 3 percent on Monday
Oil slid ahead of talks this week between world powers to salvage a nuclear deal with Iran while rising virus cases in parts of the world such as India muddied the demand outlook.
Futures in New York fell as much as 3 percent on Monday. Iran, the European Union, and the US are set to gather in Vienna on Tuesday to discuss the potential resurrection of the 2015 Nuclear deal, presenting a possible path toward removing sanctions on the Middle Eastern country’s oil exports. Yet, Iran indicated talks won’t succeed without the US fully removing sanctions.
Meanwhile, governments around the world are struggling to control the spread of Covid-19, which is denting the near-term trajectory of a rebound in oil consumption. France is seeing rising cases as the country enters a third nationwide lockdown, while new daily infections in India hit a record.
The market is under pressure from “the sense that there’ll be a lot more oil shipped out of Iran even before a deal, because customers may feel like the Biden administration is not going to be aggressive in trying to penalize those who buy oil from them,” said Michael Lynch, president of Strategic Energy & Economic Research. There’s also concern “that the Covid variants are going to cause new lockdowns in a number of places.”
More Iranian supply coming back to the market and setbacks to a global demand rebound complicate the picture for the Organization of Petroleum Exporting Countries and its allies, which agreed last week to raise production by more than 2 million barrels a day over the next several months. Meanwhile, Iran’s exports of crude, condensate, and oil products could easily reach as much as 2 million barrels a day in the coming months amid a relatively muted U.S. response to higher shipments, according to consultant FGE.
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