Oil prices calmed after a volatile trend on Monday, taking into account the opposite scenarios of Russia’s possible tight energy supply due to the Ukraine crisis and a possible nuclear deal between Iran and world powers to bring more crude to the market.
US President Joe Biden and Russian President Vladimir Putin agreed in principle to hold a summit on Ukraine, France said on Monday.
Brent crude futures and West Texas Intermediate (WTI) crude rose more than $1 per barrel at the start of Asian trade, then fell by nearly $1 on news of a US-Russia summit.
Brent crude futures were down 15 cents, or 0.2%, to $93.39 at 0445 GMT, after previously hitting $95.
West Texas Intermediate (WTI) crude futures fell 7 cents to $91.14 a barrel, below the previous high of $92.93.
US markets will be closed today for the Presidents Day holiday.
Oil markets were tense last month over concerns that the Russian invasion of Ukraine could disrupt crude oil supplies, but the prospect of Iranian crude returning to the market with a supply of more than 1 million barrels per day limited price increases.
Rumors are growing that a deal to revive Iran’s 2015 nuclear deal is imminent. There is a lot of geopolitical pressure on market movements and it’s hard to know what the answer will be.
While analysts say the market remains tight and any contribution to increasing oil supply will benefit, it would be more accurate to say that prices will remain volatile in the near term as Iranian crude oil is only expected to return towards the end of this year.
For Russia, if it invades Ukraine, it is inevitable that it will be cut off from the international financial markets and have difficulties in reaching the big export targets needed to modernize its economy. If the Russian invasion does occur, Brent futures could rise above US$100 a barrel even if a deal is reached in Iran.
Despite the $100 oil expectation, Arab oil-producing countries on Sunday rejected calls for more pumping to ease the pressure on prices, saying OPEC+ must stick to its current agreement to add 400,000 barrels of oil per day to production each month.
Meanwhile, the White House is said to be in preparation for a large strategic oil reserve (SPR) release, coordinated through the International Energy Agency, to prevent a massive spike in prices. It is estimated that the US SPR release will be larger than in November, with more products available this time through direct sales.