Oil prices extended their losses on Friday and headed for the weekly slide as the possibility of extra supply from Iran returning to the market outweighed fears of a possible supply disruption from Russia’s invasion of Ukraine.
Brent crude futures fell 47 cents, or 0.5%, to $92.50 a barrel at 0410 GMT, extending a 1.9% drop from the previous session.
West Texas Intermediate (WTI) crude futures fell 62 cents, or 0.7%, to $91.14 a barrel, after falling 2% in the previous session.
Both benchmarks hit their highest levels since September 2014 on Monday but headed for their first weekly drop in nine weeks amid news that Iran is on the verge of a deal with world powers to revive the 2015 nuclear deal.
Diplomats said the draft agreement outlined a series of steps that would eventually lead to an exemption from oil sanctions. This means about 1 million barrels of oil a day will arrive on the market, but the timing is uncertain.
For the time being, the downward pressure on crude oil is likely to continue as the parties do not finish their rounds of negotiations with the possibility of a deal.
The fear premium of Ukraine tensions in crude oil began to ease. Almost near seven-year low global oil inventories, and the Organization of the Petroleum Exporting Countries and its allies’ supply growth and reserve capacity are disappointing.
Prices are not expected to drop much in the near term, even with the prospect of Iranian oil as OPEC+ struggles to meet production targets.
Oil demand continues to recover as air travel and road traffic increase. The expectation that Brent will hover in the range of $90 to $100 per barrel in the short term is still warm. If the tension between Russia and Ukraine increases, it is very normal to see it exceed 100 dollars.
Canada will host a meeting on the Ukraine crisis with leaders of the United States, France, Germany, Italy, Poland, Romania, the United Kingdom, the European Union, and NATO.