US crude settles down 2.7%, potential Iran nuclear deal snaps 3-day rally

AgenciesUpdated: Friday, March 04, 2022, 09:30 AM IST
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US crude's West Texas Intermediate, or WTI, benchmark settled down $2.93, or 2.7 percent, at $107.67 a barrel. It earlier surged to $116.57, its highest since September 2008. / Representative image | Photo credit: IANS

US oil hit 2008 highs before settling down almost 3 percent on Thursday in its first retreat in four days, pressured by the likelihood of an imminent Iranian nuclear deal that could bring fresh crude supply to a market amid worries about the impact of sanctions on Russian oil.

US crude's West Texas Intermediate, or WTI, benchmark settled down $2.93, or 2.7 percent, at $107.67 a barrel. It earlier surged to $116.57, its highest since September 2008, extending a three-day run-up on concerns that the sanctions on Russia could severely impact energy exports from a country that provides 10 percent of the world's oil needs. Along with WTI, global oil benchmark Brent settled down $2.47, or 2.2 percent, at $110.46 a barrel, also sliding for the first time in four days. Brent's session peak of $119.78 on Thursday was the highest since May 2012.

Oil's retreat came after headlines suggesting brisk progress in talks between Iran and global powers to reactivate Tehran's 2015 nuclear deal that could free the Islamic Republic itself from US sanctions on its oil.

Iranian media quoted Mikhail Ulyanov, Russia's chief negotiator at the nuclear talks, as saying an agreement was likely over the next few days, paving way for the legitimate return of Tehran's oil to the market.

Iran and the UN Security Council's Five Permanent Members - the United States, Russia, China, Britain and France - along with Germany, originally agreed to a nuclear accord in 2015 that would allow Tehran to export oil so long as it did develop atomic weapons. But in 2018, the then US president, Donald Trump, pulled America out of the deal and unilaterally put sanctions on Iranian oil.

Iran's crude exports were averaging 2.4 million barrels per day, with a peak of more than 2.8 million, before Trump's move.

Thursday's slide in WTI and Brent also came on the back of "some profit-taking because the price has risen so far so fast," said Craig Erlam, analyst at online trading platform OANDA.

Both crude benchmarks had rallied about 30 percent over just three days of trading before the slide.

(With inputs from ANI)

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