Oil Continues to Slide Amid Anticipation of US-Iran Talks Results - Sarmad
Oil continued to fall on Wednesday after sharp declines in the previous two trading sessions, as investors awaited news on whether efforts to end the conflict between the United States and Iran and resume navigation through the Strait of Hormuz were making progress.
Brent crude futures fell 92 cents, or about 1.2 percent, to $78.44 per barrel by 03:30 GMT. Brent futures have dropped more than 12 percent since the start of the week.
West Texas Intermediate (WTI) crude futures declined $1.07, or 1.4 percent, to $74.70 per barrel. U.S. crude futures losses have reached 11 percent since the start of the week.
Qatar said on Tuesday that mediators were making progress in an attempt to end the war, leading to a drop in oil prices, despite Tehran’s denial that talks were underway, as confirmed by U.S. President Donald Trump. Brent crude settled below $80 per barrel for the first time since July 13.
Brian Sachdeva, head of market research at Philip Nova, stated that “although the immediate geopolitical risk premium is fading, the overall supply picture warrants caution.”
She added, “If diplomatic efforts fail and actual supplies are ultimately affected, the current decline may be short-lived, as limited inventory levels will exacerbate the impact of any future supply shocks.”
Before the war broke out, about 20 percent of global oil and liquefied natural gas (LNG) supplies passed through the strait, and in March alone, prices rose by 50 percent.
Analysts at IG wrote in a note that “the main point of contention appears to be whether Iran will continue to insist on some degree of control over the waterway, and whether the United States will stick to its position and reject this outcome.”
Market sources on Tuesday, citing data from the American Petroleum Institute (API), said U.S. crude oil and gasoline inventories rose while distillate inventories fell last week.
Sources, who requested anonymity, said crude oil inventories rose by about 2.7 million barrels in the week ending July 31.
Official data from the U.S. Energy Information Administration (EIA) under the Department of Energy is scheduled to be released at 10:30 a.m. Eastern Time (14:30 GMT) on Wednesday.
