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Oil Falls 2.3% on Prospect of Iran Sanctions Relief
WTI crude slid to $73.40 after the White House signaled direct talks with Iran. A deal could lift sanctions and add millions of barrels to global supply, pressuring prices further.
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West Texas Intermediate crude fell 2.3% to $73.40 a barrel Monday after the White House opened the door to direct negotiations with Iran. Brent crude, the international benchmark, dropped 1.9% to $77.15. The decline reversed part of last week's rally, which had been fueled by fresh U.S. sanctions on Iranian oil exports. Traders said the diplomatic shift raised expectations of sanctions relief and a potential return of Iranian barrels to global markets.
Iran exports roughly 1.5 million barrels a day, almost all of it to China under shadow fleet arrangements. A new nuclear deal could allow that number to rise by 500,000 to 1 million barrels within a year, traders said. The added supply along with OPEC+'s planned unwinding of production cuts starting in April could create a surplus of 1 million to 1.5 million barrels per day in the second half of the year, they said.
The pattern has history. After the 2015 Joint Comprehensive Plan of Action framework was announced, oil prices dropped roughly 10% in the following weeks. This time, the calculus also includes Russian supply dynamics and slowing Chinese demand.