Oil prices increased on Wednesday with an anticipated fall in US crude inventories, but this trajectory could be threatened if negotiations over Iran’s nuclear deal prove successful in lifting sanctions on oil exports to allow Iran to place extra barrels on the market.
International benchmark Brent crude was trading at $68.81 per barrel at 0722 GMT for a 0.46% gain after closing Tuesday at $68.49 a barrel.
American benchmark West Texas Intermediate (WTI) was trading at $66.33 a barrel at the same time with a 0.39% jump after ending the previous session at $66.07 per barrel.
Late Tuesday, the American Petroleum Institute (API) announced its estimate of a fall of 439,000 barrels in US crude oil inventories relative to the market expectation of a draw of 1.8 million barrels.
The forecast of a larger inventory draw signals a recovery in crude demand in the US, easing investor concerns about declining demand to support higher prices.
-Iran, US stalemate
Iran and world powers committed to the 2015 nuclear deal began talks in Vienna on Tuesday to bring the US back to the agreement.
The fifth round of negotiations came a day after a deal was agreed between Iran and the UN's International Atomic Energy Agency for a one-month extension on the observation of Iran's nuclear activity.
The US is not a direct participant in the talks, although representatives from Germany, France, the UK, Russia, and China attended the previous meetings.
Iranian Deputy Foreign Minister Abbas Araghchi, who represents Iran during the talks, told Iran state television that the fifth round might be the last round as "good progress" had been made in the previous four rounds.
"There are still important issues that need to be touched on," he said. "We hope that we will be able to reach a final solution during these several days of negotiations."
Although a resolution to bring the US back to the 2015 nuclear agreement and lift sanctions on Iran’s oil exports means more supply on the markets at a time when demand is only just recovering from the scars of the pandemic, some experts concur that the market has already priced in Iranian barrels and is sufficiently prepared to increase the supply capacity.
Over the past several weeks, Iran and other signatories to the deal, officially known as the Joint Comprehensive Plan of Action (JCPOA), have been engaged in marathon negotiations in the Austrian capital Vienna to revive the accord.
Former President Donald Trump unilaterally withdrew the US from the agreement in 2018 and not only reimposed sweeping sanctions it had agreed to lift under the deal but imposed new ones in the hope that the penalties would bring Iran back to negotiations for what Trump hoped would be a "better" deal.
Iran resisted his efforts and instead stepped away from the nuclear restrictions it agreed to under the accord as regional tensions between the US and the Islamic Republic soared.
The JCPOA is an agreement on the Iranian nuclear program reached in Vienna on July 14, 2015, between Iran and the P5+1, comprising the five permanent members of the UN Security Council -- China, France, Russia, the UK and the US -- plus Germany together with the European Union.
By Sibel Morrow