SINGAPORE, Feb 9 (Reuters) – Oil prices fell 1% on Monday as immediate fears of a conflict in the Middle East eased after the U.S. and Iran pledged to continue talks about Tehran’s nuclear programme over the weekend, calming investors anxious about supply disruptions.
Brent crude futures fell 67 cents, or 1%, to $67.38 a barrel on Monday by 0444 GMT, while U.S. West Texas Intermediate crude was at $62.94 a barrel, down 61 cents, or 1%.
“With more talks on the horizon the immediate fear of supply disruptions in the Middle East has eased quite a bit,” IG market analyst Tony Sycamore said.
Iran and the U.S. pledged to continue the indirect nuclear talks following what both sides described as positive discussions on Friday in Oman despite differences. That allayed fears that failure to reach a deal might nudge the Middle East closer to war, as the U.S. has positioned more military forces in the area.
Investors are also worried about possible disruptions to supply from Iran and other regional producers as exports equal to about a fifth of the world’s total oil consumption pass through the Strait of Hormuz between Oman and Iran.
Both benchmarks fell more than 2% last week on the easing tensions, their first decline in seven weeks.
However, Iran’s foreign minister said on Saturday Tehran will strike U.S. bases in the Middle East if it is attacked by U.S. forces, showing the threat of conflict is still alive.
“Volatility remains elevated as conflicting rhetoric persists. Any negative headlines could quickly reignite risk premiums in oil prices this week,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Investors are also continuing to grapple with efforts to curb Russian income from its oil exports for its war in Ukraine. The European Commission on Friday proposed a sweeping ban on any services that support Russia’s seaborne crude oil exports.
Refiners in India, once the biggest buyer of Russia’s seaborne crude, are avoiding purchases for delivery in April and are expected to stay away from such trades for longer, refining and trade sources said, which could help New Delhi seal a trade pact with Washington.
“Oil markets will remain sensitive to how broadly this pivot away from Russian crude unfolds, whether India’s reduced purchases persist beyond April, and how quickly alternative flows can be brought online,” Sachdeva said.
(Reporting by Florence Tan and Sudarshan Varadhan; Editing by Jamie Freed and Christian Schmollinger)
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