The Iran nuclear talks, which started in Vienna on Tuesday, continue. Oil prices rose on Wednesday after industry data showed an unexpected drop in US crude and fuel stockpiles, despite concerns about a possible supply from Iran.
Brent crude futures rose 41 cents, or 0.5%, to $91.19 a barrel as of 0422 GMT, while West Texas Intermediate (WTI) crude was up 38 cents, or 0.4%, to $89.74 a barrel.
It is obvious that the key factor that increased the oil price was that the supply balance could not be established despite the increasing demand.
U.S. crude oil, gasoline, and distillate stockpiles fell last week, according to market sources based on Tuesday’s figures from the American Petroleum Institute (API). Crude oil inventories fell 2 million barrels, despite analysts’ expectations for a 400,000-barrel increase, according to the API.
Comparable data, and more will be available as of 1530 GMT today, in accordance with data to be released by the EIA.
Nevertheless, developments regarding a possible Iran nuclear deal, which is likely to contribute to global markets in terms of supply, are putting downward pressure on prices. With such a deal, the US could lift its sanctions on Iranian oil, and with-it additional supply could quickly come to the market, although there are a number of vital issues to be resolved.
Brent and WTI had entered their second straight session on Tuesday, losing nearly 2%, as Washington resumed indirect talks with Iran to revive the nuclear deal.
With the negotiations continuing, despite the rise we see today, prices, which reached 7-year highs, are likely to lose their strength next week.
Oil prices close to $100 per barrel may attract more production from the US. The Energy Information Administration (EIA) expects US crude oil production to increase by 770,000 bpd to reach 11.97 million bpd in 2022.
Meanwhile, governments from the United States to Japan are looking for ways to combat high oil prices as inflation soars.
The leaders, who met with Russian President Vladimir Putin to address the concerns about Ukraine, called for restraint to the parties, and it is believed that the diplomacy path is open to calm the crisis.