Oil Rises as Traders Focus on US-Iran Discussions Later Friday
(Bloomberg) — Oil rose ahead of planned talks between Iran and the US later on Friday, as Tehran signaled that there won’t be a quick resolution to escalating tensions between the two sides.
Brent climbed toward $69 a barrel after declining 2.8% on Thursday, while West Texas Intermediate traded above $64. Futures swung to gains after Iranian media reported that discussions will be slightly delayed and would focus on “broad topics” rather than minor technical issues.
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Iran’s main priorities include “assessing the other side’s goodwill and seriousness,” IRNA said. “The road map for negotiations appears set to become clearer once this round concludes.”
Oil is still on track for its first weekly loss since mid-December, trimming some of the risk premium that’s formed because of the heightened tensions in the Middle East, which provides about a third of the world’s crude. Nevertheless, varying positions over the parameters of US-Iran negotiations make it unclear whether the two sides can realistically bridge major differences — meaning the talks will likely continue to overshadow physical oversupply.
“Oil markets are shedding some of that geopolitical risk premium and returning to fundamentals, which essentially show that there are adequate supplies,” said Samantha Hartke, head of market analysis for the Americas at Vortexa Ltd., an energy data tracker. “If negotiations sour, then the risk premium piles back on.”
Saudi Arabia cut prices for buyers in Asia by less than expected in a sign the kingdom has faith in demand for its barrels, although prices have still been lowered to the lowest since late-2020.
Meanwhile, in trilateral negotiations with the US, Ukraine and Russia agreed to exchange prisoners for the first time in five months as they sought to end their four-year conflict. Talks were making progress, with results expected “in the coming weeks,” Trump’s special envoy said.
Elsewhere, BP Plc is looking for a partner to help ramp up production and share some costs at Iraq’s Kirkuk oil field, one of the oldest in the Middle East. The OPEC member’s prolific crude deposits are often easier and cheaper to bring to production than areas outside the region.
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