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- WTI price tumbles to around $61.20 in Friday’s early Asian session.
- Trump said the US was getting close to securing a nuclear deal with Iran.
- Oil inventories climbed by 3.454 million barrels in the week ended May 9, according to the EIA.
West Texas Intermediate (WTI), the benchmark for US crude oil, is currently trading in the vicinity of $61.20 during Friday’s Asian trading session. The WTI price is experiencing downward pressure amid growing expectations that the United States and Iran may be nearing an agreement regarding Tehran’s nuclear program, a development that could significantly impact global oil supply dynamics. Market analysts are closely monitoring these geopolitical developments for potential shifts in supply and demand.
Adding to the market speculation, a senior advisor to Iran’s supreme leader indicated on Wednesday that Iran is prepared to finalize a nuclear agreement with the United States, under specific conditions, with President Donald Trump, contingent upon the lifting of existing economic sanctions. Further fueling these expectations, President Trump stated on Thursday that the US was approaching a point of securing a nuclear deal with Iran, suggesting that Tehran had tentatively agreed to the proposed terms. This potential breakthrough in negotiations is a key factor influencing the WTI price, as the removal of sanctions could lead to a surge in Iranian oil exports. The market is also digesting the latest inventory data and geopolitical tensions in other regions, which could offset the impact of a potential Iranian nuclear deal.
According to SEB analyst Ole Hvalbye, “(Any) immediate sanctions relief stemming from a nuclear agreement could unlock an additional 0.8 million barrels per day of Iranian crude for the global market – an undeniably bearish development for prices.” This potential increase in supply is a significant concern for oil producers and traders, as it could lead to a surplus in the market and drive prices lower. Furthermore, the Energy Information Administration (EIA) reported a substantial increase in US crude oil inventories, which also contributed to the downward pressure on WTI prices. The EIA data revealed that oil inventories climbed by 3.454 million barrels in the week ending May 9, exceeding market expectations and signaling weaker demand. Investors are now keenly awaiting the release of further economic data, including inflation figures and GDP growth estimates, to gauge the overall health of the global economy and its potential impact on oil demand.
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