Crude oil slides from multi-year highs as Iran talks rev up

Highlights

• Crude oil prices tumbled on Thursday.
• The prices of both the oil benchmarks hit multi-year high levels during the initial trading sessions on the same day.
• Negotiations to revive Iran's nuclear deal have been going on for nearly 10 months in Vienna.

Crude oil prices tumbled nearly 2% after hitting a decade-high level on Thursday in hopes that the US and Iran will agree soon on a nuclear deal that could allow Iran to pump oil to the international market. The Iranian fuel will help to cool down the soaring oil prices.

Trade was very volatile on Thursday. The prices of both the oil benchmarks hit multi-year high levels during the initial trading sessions on expectations that the market will remain short of supply in the coming months, following sanctions on Russia.

Must Read: Crude oil rises on fresh Russia-Ukraine war warnings

On Thursday, both crude oil benchmarks rose to multi-year highs during the session. The prices of Benchmark Brent Crude Oil soared to US$119.84, the highest since May 2012 while Benchmark WTI Crude Oil reached its highest since September 2008 at US$116.57.

Crude oil prices started their bull run after the Western allies coupled with Japan imposed firm sanctions on Russian banks, blocking their SWIFT payment which is a global payment system that enables rapid cross-border payments, making trade flow smooth.

Additionally, May delivery Brent Crude oil futures last traded at US$111.62 per barrel up 1.12%, whereas April delivery WTI crude oil futures traded 1.41% up at US$109.19 per barrel as of 04 March 2022 at 12:59 PM AEDT.

Must Read: Crude oil hits fresh seven-year high amid Russia-Ukraine tension

A new round of sanctions on Russia

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The prices hit multi-year highs after the announcement of fresh sanctions on Russia by Western allies. White House banned the export of specific refining technologies, making it harder for Russia to modernize oil refineries. Traders remain distrustful of Russian oil and nearly 10 tankers failed to find buyers on Wednesday.

Meanwhile, negotiations to revive Iran's nuclear deal have been going on for nearly 10 months in Vienna. The US and Iran have nearly completed negotiations on reviving the deal, which on finalisation will bring nearly 1Mbpd of crude oil flow into the market.

Good Read: How a Russian invasion of Ukraine might impact crude oil prices

OPEC’s stance in the current matter is almost neutral till now. The group along with its allies (OPEC+) is attached to its long-term plan of boosting output by 400,000bpd, discussed at a brief meeting on Wednesday.

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Though OPEC+ agreed to boost the output for the last several months, members struggled to achieve their target production, extending the gap between demand and supply.

Also Read: WTI Crude surpasses US$90/bbl as frigid weather cascades across the US

Bottom Line

Crude oil prices slide from decade-high levels on Thursday as the talks on the revival of the Iran nuclear deal revs up. The revival of the deal could bring 1Mbpd of oil into the market.