| 23 February 2024, Friday |

Oil price set to surge further on Iranian talks delays

Analysts predict that oil prices will rise further this week owing to delays in the completion of Iranian nuclear talks and the likely return of Iranian petroleum to global markets, which are already suffering from Russian supply problems.

Russia has renewed its demand for formal guarantees from the United States that sanctions imposed on Moscow as a result of its invasion of Ukraine will not affect Russian-Iranian cooperation. According to insiders, China has also proposed additional demands.

Last week, the Brent standard surged 21% to settle at $118.11 per barrel, while US crude rose 26% to close at $115.68, both at levels not seen since 2013 and 2008, respectively, as Russia struggled to sell oil despite new sanctions.

“Iran was the only real bearish factor hanging over the market but if now the Iranian deal gets delayed, we could get to tank bottoms a lot quicker especially if Russian barrels remain off the market for long,” said Amrita Sen, co-founder of Energy Aspects think-tank.

Sen said Brent could rise to $125 per barrel on Monday, quickly approaching an all-time high of $147, last seen in 2008.

Analysts from JP Morgan said this week oil could soar to $185 per barrel this year.

Russia exports around 7 million bpd of oil and refined products or 7% of global supply. Some volumes of Kazakhstan’s oil exports from Russian ports have also faced complications.

Iran will take several months to restore oil flows even if it reaches a nuclear deal, analysts said.

Eurasia Group said fresh Russian demands could disrupt nuclear talks although it still kept the odds of a deal at 70%.

“Russia may intend to use Iran as a route to bypass Western sanctions. A written guarantee allowing Russia to do so is probably well beyond the realm of what Washington can offer in the midst of a full-scale war in Ukraine,” said Eurasia’s Henry Rome.

  • Reuters