Oil prices rose on Thursday, even after France and Iran said parties are closer to an agreement to salvage Iran’s 2015 nuclear deal with world powers, offsetting tensions over Russian forces massing near Ukraine.
U.S. West Texas Intermediate (WTI) crude was trading at $92.02 a barrel, up $1.26, or 1.39%, after gaining 1.7% the previous day.
“Positive news from the U.S.-Iran nuclear negotiations is providing much-needed relief to global oil prices, as the possibility of new crude supplies reduces the supply-demand deficit,” said Claudio Galimberti, senior vice president of consultancy Rystad Energy.
France said on Wednesday a decision on salvaging Iran’s 2015 nuclear deal with world powers was just days away and that it was now up to Tehran to make the political choice, while Tehran called on Western powers to be “realistic.”
With the new deal beckoning, South Korea, previously one of Tehran’s leading oil customers in Asia, said on Wednesday it had held working-level talks on resuming imports of Iranian crude oil and unfreezing Iranian funds.
In a research note earlier on Thursday, Eurasia Group said in the event of a deal Iran would be able to enter the market ramping up supplies faster than following the deal in 2015.
“This time around, the phasing in of the deal could take 1-2 months, but Iran will likely begin ramping up oil exports immediately, both legally and illegally,” Eurasia noted, adding that the supplies could come from floating storage Iran held in Asia as well as oil stored in bonded tanks in China.
Oil markets have been dominated in recent weeks by Russia’s threatening posture toward Ukraine, with concerns that supply disruptions from the major producer in a tight global market could push oil prices to $100 a barrel.
Russia’s announcement of a partial pullback of troops from near Ukraine earlier this week was countered by Western governments’ warning that Russia was building up military presence near the Ukraine border, keeping the tension simmering.
“In the past few weeks, markets have priced in Russia-Ukraine tension that would lead to more production and supply disruption in an already tight supply situation in the oil markets,” said Tina Peng, analyst at CMC Markets.
“We could see a further pullback in oil prices amid the cooling geopolitical tensions.”