The price of a barrel of crude oil on Friday closed higher, but locked up on a weekly basis and 2.7% lower, due to signs of progress towards a restoration of the nuclear deal with Iran, which the world’s supply of crude oil will increase.
“A general correction in the recent high-performance commodity market is a major reason for the weakness of crude oil,” said Commerzbank’s Carsten Fritsch.
“Moreover, the possible return of Iranian oil exports is depressing prices. The reflections that are currently going to be to reinvigorate the 2015 international nuclear agreement are being prepared,” he said.
The European Union diplomat leading the negotiations expressed confidence that an agreement would be reached after the last round of discussions ended earlier this week. Iranian president Hassan Rouhani said Thursday that the US is ready to lift sanctions against Iran, although no confirmation came from Washington.
“If the oil sanctions imposed on Iran were indeed imposed, up to 2 million barrels of extra crude oil per day could arrive on the market,” Fritsch said.
Between April 2016 and July 2018, Iran exported an average of 2.2 million barrels of crude oil per day. The additional Iranian oil exports would be fully equal to the supply shortage predicted by the International Energy Agency in the fourth quarter. As a result, OPEC and its allies would not have to increase production further to avoid a tightening of the market.
A July future for a barrel of crude oil closed on Friday 2.7 percent, or $ 1.64, higher at $ 63.58 on the New York Mercantile Exchange.