Oil prices rise after new doubts cast over US and Iran nuclear talks

Oil prices rise after new doubts cast over US and Iran nuclear talks
2 min read
24 May, 2021
Anticipated Iranian oil exports had pushed prices down, but disagreements over the inspection of sites has given a bump to markets.
A lifting of US sanctions would allow Iran to resume oil exports [Getty]

Oil prices rose Monday amid speculation that talks between the US and Iran to revive the 2015 nuclear deal were faltering, according to reports by Reuters

Both Brent crude oil and US West Texas Intermediate July futures rose by 0.6 percent, after previously dropping in anticipation of increased supply with the expected successful outcome of nuclear talks. 

Prices fell when Iran’s president, Hassan Rouhani, declared that the US was ready to lift all sanctions on the country's oil, banking and shipping sectors. 

"Iran's oil production has been rising in recent months, likely in anticipation of a lifting of the sanctions," said ANZ analysts on Monday. 

Hopes for a new nuclear deal were dealt a blow on Sunday when Iran's parliament speaker said on Sunday that a three-month monitoring deal with the UN nuclear watchdog had expired. 

The expiration of the deal means that the watchdog will no longer have access to images from inside Iranian nuclear sites. 

"From 22 May and with the end of the three-month agreement, the International Atomic Energy Agency agency will have no access to data collected by cameras inside the nuclear facilities agreed under the agreement," Parliament Speaker Mohammad Baqer Qalibaf was quoted as saying by Iranian state TV. 

Last week, European diplomats warned that unless there was an extension to the monitoring agreement, then talks to revive a deal would be negatively affected. 

Iran and the US have been holding indirect talks aimed at restarting the 2015 nuclear deal, which the former Donald Trump administration unilaterally withdrew from in 2018. Talks are set to resume this week. 

Analysis
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Oil prices are anticipated to remain high even if Iranian crude goes back on the market due to vaccine rollouts across the world, according to analysts at Goldman Sachs. 

"Even aggressively assuming a restart in July, we estimate that Brent prices would still reach $80 per barrel in fourth quarter, 2021, with our new base case for an October restart still supporting our $80 per barrel forecast for this summer," said Goldman Sachs in a note.