Oil fell sharply, dropping more than 4%, on regional media reports that ignited speculation over progress for an Iran-US deal. The sharp drop came amid a background of demand concerns for energy consumption.
(Bloomberg) — Oil fell sharply, dropping more than 4%, on regional media reports that ignited speculation over progress for an Iran-US deal. The sharp drop came amid a background of demand concerns for energy consumption.
West Texas Intermediate fell below $70 a barrel on regional media reports including Israel’s Haaretz newspaper that said Iran and the US have made progress in talks over the Islamic Republic’s nuclear program. The talks are being closely watched by oil traders because any deal to relax sanctions could allow more Iranian crude to flow into markets.
“This knee-jerk move lower is likely an over reaction,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth, noting that the conversations are not taking place at the highest levels of US or Iranian decision makers. “However, the price action demonstrates just how quickly crude can turn lower while it struggles to move higher even when there are positive developments,” she added.
Oil is down 10% this year as China’s sluggish economic recovery, interest rate hikes from the Federal Reserve and robust Russian crude flows weigh on prices. In an attempt to rally prices, Saudi Arabia’s pledged to cut over 1 million barrels a day on top of cuts made by the cartel earlier this year.
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