Oil prices fell by 2% early on Tuesday as talks for bringing Iran and the United States back to the so-called Iranian nuclear deal entered a crucial final stage in Vienna amid signs that progress may have been made.
As of 10:32 a.m. EST, WTI Crude had dropped below the $90 a barrel mark and traded at $89.58, down by 1.91% on the day. Brent Crude had eased from the seven-year high of $93 and was down 1.88% at $90.93, just as diplomats from Iran and the countries still in the Joint Comprehensive Plan of Action (JCPOA) resumed talks on Tuesday to try to salvage the deal. The talks are in a crucial final stage amid pressure for results.
Oil market participants will closely watch the talks for clues about progress, considering that reviving the deal would lead to the United States removing the sanctions on Iranian oil exports.
In a potentially positive sign of progress, the U.S. Administration restored sanction waivers on Friday, allowing Iran international cooperation for civil nuclear purposes. This was interpreted as a positive signal from the so-far difficult talks, which, if successful, would lead to the U.S. removing sanctions on Iranian oil exports.
If a deal is reached in the talks, it could reverse the oil price rally of the past few weeks. Expectations are that this would be the final round of talks for trying to revive the deal, and it would end with either a deal or a “nuclear crisis.” The U.S. has signaled that there isn’t much time left for an agreement before Iran advances in its nuclear weapon efforts.
A return of Iran’s legitimate oil exports would bring relief to the tight oil market and to rallying oil prices. Most analysts do not expect Iranian barrels back to the market in the second quarter, but later this year, we could see a ramp-up in Iranian oil exports, provided—of course—that the ongoing talks are successful.
By Tsvetana Paraskova for Oilprice.com
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