Oil prices pared some losses on Monday, with Brent gaining nearly 2% as a nuclear deal with Iran seemed to fade further away and markets refocused on Europe’s coming ban on Russian oil and tight supply fears.
At 11:50 a.m. EST on Monday, Brent crude was trading up $1.90, at $94.74 per barrel, for a 2.05% gain on the day. WTI was trading up $1.69, at $88.48 per barrel, for a 1.95% gain on the day.
Iranian nuclear talks appear to be contributing heavily to the rally, with European diplomats expressing “serious doubt” that Tehran is genuinely seeking a revival of the 2015 nuclear deal.
Israeli Prime Minister Yair Lapid, currently in Germany, highlighted what he referred to as “encouraging signs” that the nuclear deal would not be revived, suggesting that Israeli plans to the end were showing success.
The absence of a nuclear deal with Iran keeps Iranian barrels off the market, further speaking to tight supply, fears of which are currently being offset–on and off–by China’s COVID lockdowns.
All last week, lockdowns in China–the world’s top energy importer–weighed on oil prices amid forecasts that the country’s demand could shrink for the first time since 2002 amid mobility restrictions.
By Monday, however, we have seen a return of fears that tight supply will not be able to balance robust demand as the European Union’s ban on Russian seaborne crude nears its December 5th implementation deadline, and as the G7 puts plans in motion to cap Russian oil prices at the same time.
Also contributing to a boost in oil prices, the US dollar, which has surged some 13% this year, is retreating from earlier highs, starting Monday down ahead of U.S. inflation data to be released on Tuesday.
By Tom Kool for Oilprice.com
More Top Reads From Oilprice.com:
- China's Annual Oil Demand Could Drop For The First Time In 20 Years
- The UK’s New Prime Minister Considers Lifting Fracking Ban
- Nigeria’s Oil Exports Plunge To Record Low