Oil prices fell by more than 3 per cent on Thursday on expectations of a possible nuclear deal between the US and Iran that could result in Tehran boosting oil supply to the market if sanctions are eased.
US President Donald Trump on Thursday said Washington was close to reaching a deal with Tehran.
Brent, the benchmark for two thirds of the world's oil, was down 3.63 per cent at 1.55pm UAE time to $63.69 a barrel, while West Texas Intermediate, the gauge that tracks US crude, was trading 3.86 per cent lower at $60.71 a barrel.
“The news that Iran is ready to curtail its nuclear programme in exchange for sanctions relief is weighing on oil prices for the second session,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said.
“The barrel of US crude eased below the $61.50 per barrel level this morning on the back of rising Iranian supply prospects – which add to Opec’s oil restoration plans – versus a fragile improvement in demand prospects.”
A top Iranian official on Wednesday said Iran could accept curbs on its nuclear programme and forego highly enriched uranium in exchange for a deal that would see sanctions lifted.
Ali Shamkhani, adviser to supreme leader Ayatollah Ali Khamenei, said that Tehran could agree to never develop nuclear weapons, give up stockpiles of highly enriched uranium and allow inspectors to nuclear sites if economic sanctions were lifted.
When asked if Iran would be willing to sign an agreement with the Trump administration, if sanctions were lifted immediately, Mr Shamkhani said “yes”, in a conversation with NBC News.
Iran is Opec’s third-largest oil producer, with an output of 3.3 million barrels per day as of April, according to the latest monthly oil market report by the oil producers group.
If a deal is reached between the two countries, it could lead to a boost in supply from Iran, based on the possibility of sanctions relief.
Opec+ plans to boost output in anticipation of higher demand is also weighing on oil prices.
Earlier this month, the alliance of producers including Saudi Arabia and Russia agreed to increase production by 411,000 bpd for a second month in a row in June after the group decided to add the same volume of oil to the market in May.
Oil prices remained volatile this year amid the announcement of new tariffs, Iran nuclear talks and tariff negotiations between China and the US, the world's two largest economies.
