Oil prices hang wait on conflict negotiations on Iran, Ukraine
Ease of sanctions on Iran is out of sight following sharp disagreement between the country and the United States. And the expected outcomes of the highly anticipated phone call between Presidents Vladimir Putin of Russia and Donald Trump of United States on ending the Ukrainian war failed to materialize.
The two failed measures signal bullish sentiments in the global oil trade as both Russia and Iran fall deeper into pariah positions in the international oil market.
With Brent at $65 per barrel and WTI at $62.5 per barrel, traders had assessed that the next big pricing move might come from the Russia-Ukraine or US-Iran negotiations.
Whereas fifth round of US-Iran talks is scheduled for Rome this upcoming weekend, the Trump administration is ratcheting up sanctions pressure on Iranian shipping companies and Chinese buyers of Iranian oil, having OFAC-listed two Chinese refiners last month.
Negotiations expected to resolve series of military bellicose over Iran’s nuclear programme fell apart early in the week after Iran’s leader, Ayatollah Ali Khamenei, questioned the viability of a deal with the United States, saying that Trump’s demand to halt nuclear enrichment is ‘excessive and outrageous.’
The declaration by Iran lowered the likelihood of a diplomatic breakthrough and raised concerns about the fate of Iranian oil in the international market.
Chinese refiners which account for 77% of all Iranian exports last year are hoping for the negotiations to fail so-called teapots in Shandong province would no longer enjoy discounts on Iranian oil.
According to OPEC secondary sources, Iran’s oil production remained steady at 3.3 million b/d in April, higher than the 2024 average of 3.25 million b/d, even if floating storage of Iranian storage anchored off Singapore and Malaysia has been on the rise, potentially signaling difficulties in delivering the oil to China.