Oil fluctuates as traders weigh US sanctions and Iran talks
(Bloomberg) — Oil swung between gains and losses as the market remained dominated by U.S. sanctions on Russia and the possibility of a conclusion of nuclear talks with Iran, which could add supply to the market .
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Brent crude traded near $97 a barrel after jumping Tuesday to just 50 cents lower than $100. President Biden announced sanctions targeting the sale of Russia’s sovereign debt abroad and the country’s elites, responding to what he described as the start of an invasion of Ukraine, but avoided a wide range of sanctions.
Traders also continue to monitor the progress of efforts to revive the Iran nuclear deal. The country’s foreign minister said on Wednesday he wanted to settle the remaining issues in the coming days, but would not back down on his red lines “under no conditions”.
See also: Biden’s first round of Russian sanctions come as no surprise
Crude prices have been subject to wild swings over the past week amid conflicting geopolitical headlines from Ukraine and Iranian nuclear talks. Beyond that, the rapid spread of Brent has reached an all-time high, indicating still tight supply in the market. As tensions in Ukraine add to the risk of supply disruptions, the International Energy Agency has said its members are ready to act to ensure adequate supplies to world oil markets. Moscow has repeatedly denied that it intends to invade its smaller neighbor.
“Most of the panic over the further escalation of the Russian-Ukrainian conflict appears to have dissipated,” said Carsten Fritsch, an analyst at Commerzbank AG. “The calmer mood in the market is likely due in large measure to the fact that the sanctions against Russia agreed to so far by the West are unlikely to hamper energy supplies.”
The United States is in talks with oil exporters and importers to try to mitigate the fallout from any escalation in hostilities and sanctions, said Daleep Singh, Biden’s deputy national security adviser at the White House. The talks include the possibility of exploiting strategic oil reserves in addition to the plan announced last year, he said.
One area of the market that is under pressure is the value of Russian Urals crude. The grade was offered Tuesday at its biggest discount in at least a decade. At the same time, a South Korean oil buyer bought crude from the Middle East, apparently as an alternative to Russian oil.
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