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Tokyo - Oil held losses below $68 a barrel after French President Emmanuel Macron called for a new Iran nuclear deal to keep the US on board, raising speculation sanctions on the OPEC producer may be averted.
Futures in New York were little changed after dropping 1.4% on Tuesday. Macron proposed negotiating a new agreement that would curb Iran’s ballistic missile development and nuclear programme ahead of next month’s decision by President Donald Trump on whether the US will withdraw from the deal and reimpose sanctions on oil exports.
Fears of an increase in US crude inventories also weighed on prices.
Oil has surged more than 7% this month on concern geopolitical risk in the energy-rich Middle East is intensifying, with Trump set to decide whether to extend Iran’s sanctions relief on May 12.
While the Organisation of Petroleum Exporting Countries and its allies concluded that they have all but wiped out a global crude surplus, fears remain that US drillers may continue boosting output to record levels and offset the group’s effort to balance the market.
“Concerns that the US may reimpose Iran sanctions and supplies from the country may be disrupted eased,” Takayuki Nogami, chief economist at state-backed Japan Oil, Gas & Metals National, said by phone from Tokyo. Still, “uncertainty about Iran will likely remain until the final moment on May 12.”
West Texas Intermediate crude for June delivery traded at $67.58 a barrel on the New York Mercantile Exchange, down 12 cent, at 4:13 pm in Tokyo. Total volume traded was about 22% below the 100-day average.
Brent crude for June delivery was at $73.72 a barrel on the London-based ICE Futures Europe exchange, down 14 cent. Prices fell 85c to $73.86 a barrel on Tuesday. The global benchmark crude traded at a $6.17 premium to June WTI, near the widest level since January.
Futures for September delivery fell 2.1% to 438 yuan a barrel on the Shanghai International Energy Exchange. The contract climbed 1.7% to close at 447.3 yuan on Tuesday.
Macron’s remarks at a White House news conference with President Donald Trump came after Trump earlier warned Iran not to restart its nuclear program even if the US withdraws from the 2015 nuclear accord with the Islamic Republic.
Iran’s oil exports would drop as much as 500 000 barrels a day this year and 700 000 barrels a day in 2019 if the US revives sanctions, according to Fereidun Fesharaki, chairperson of energy consultant FGE. When reimposed, US sanctions will require buyers of Iranian crude to cut purchases within 180 days, he said.
Iran produced about 3.81 million barrels day in March, according to data compiled by Bloomberg.
Meanwhile, the American Petroleum Institute was said to report US crude inventories increased by 1.1 million barrels last week. That comes against forecasts for a 2.2 million barrels decline, according to a Bloomberg survey before government data due on Wednesday.
In the Permian basin, output is forecast to reach 3.18 million barrels a day in May, the highest since the Energy Information Administration began compiling records in 2007.
Other oil-market news:
• The world’s biggest oilfield service companies have a message for investors: There’s a payoff for patience Crude in West Texas is the cheapest in three years versus Brent as an output surge in the past year outpaced pipeline construction and filled existing lines.
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