By Sharon Cho,
Oil declined during a volatile session as traders weighed the possibility an Iranian nuclear deal may be imminent, while tracking tensions over Ukraine that swung financial assets from gold to equities. West Texas Intermediate traded lower than $90 a barrel now . $(NQmain)$
Iran’s top negotiator, Ali Bagheri Kani, tweeted that efforts to restore the deal are “closer than ever” to agreement, although the U.S. StateDepartment was more circumspect.
Tehran appears to be taking steps in Asia for its official return to the market, with officials from state-owned National Iranian Oil Co. meeting South Korean refiners.
Crude pared losses following a report from Russian news agency RIA Novosti that Moscow-backed separatists claimed that Ukrainian forces had violated cease-fire rules overnight. While Russia has insisted that it’s serious about easing tensions, and denies that it plans an invasion of its smaller neighbor, the U.S. says Moscow is still building up troop levels near the border.
There’s a “perfect recipe for high volatility,” said Vandana Hari, founder of Vanda Insights in Singapore. “The quantum of risk premium now stacked in crude guarantees sharp knee-jerk sell-offs on signs of a de-escalation and equally panicky buy-backs if tensions return.”
Crude rallied to the highest since 2014 earlier this week as demand picked up and the Ukraine crisis added a risk premium.
Should a deal with Iran be concluded, it could lead to a resumption of sanctions-free exports, augmenting global supplies. Still, obstacles to an agreement remain substantial, with major differences on what’s required to roll back Iranian nuclear advances.
The reintroduction of sanctions-free Iranian shipments, as well as clearing crude that Tehran has stockpiled, would cool a market that’s been transfixed by the possibility futures could hit $100 a barrel.
The hurdles that remain before a Iranian nuclear deal can be concluded were also highlighted in Bagheri Kani’s tweet.
“Nothing is agreed until everything is agreed, though,” he said.
“Our negotiating partners need to be realistic, avoid intransigence and heed lessons of past 4yrs.”
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