Oil extended its biggest weekly decline since April 2020 as traders weighed diplomatic efforts to end the US-Iran conflict against fresh attacks in the region. Brent front-month futures fell below $98 a barrel after losing more than 16% last week, while West Texas Intermediate was near $90. Crude has tumbled from a six-month high at the end of October after a Democratic sweep of US midterm elections boosted expectations that there won't be a serious escalation in the conflict.
US Secretary of State Marco Rubio played down chances of a breakthrough in talks on ending the conflict with Iran, saying Tehran's demands to date are unacceptable and in some cases "outrageous and ridiculous." The comments contrasted with Donald Trump's tone after CNN cited the president as saying it's "highly unlikely" he'll order more strikes if negotiations make substantial progress. Months of stop-and-go talks have failed to produce a resolution to the conflict that has hampered energy flows out of the Persian Gulf.
Jorge Leon, head of geopolitical analysis at Rystad Energy AS, said more pressure for a deal doesn't necessarily mean a deal is closer. "If we see renewed escalation, much of last week's oil price decline could quickly reverse," he said. Flareups continued in the region, with a tanker reportedly hit by an unknown projectile while transiting Hormuz and Iran-backed Houthi rebels damaging the offices of Saudi Aramco in Riyadh. Crude exports from the Persian Gulf have revived to near pre-war levels, and OPEC output has risen to 88% of February volumes, according to a Bloomberg survey.
Elsewhere, Ukraine struck a sixth Russian oil refinery in a week, while Russia is sending a high-level delegation to US-mediated talks with Ukraine in Abu Dhabi starting Tuesday. Traders will watch monthly reports from the Energy Information Administration on Tuesday, OPEC on Wednesday and the International Energy Agency on Friday.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing