© Reuters. FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, March 24, 2016. Picture taken March 24, 2016. REUTERS/Nick Oxford
By Laura Sanicola
(Reuters) -Oil prices extended losses on Friday and were heading for a weekly fall as the prospect of increased Iranian oil exports eclipsed fears of potential supply disruption resulting from the Russia-Ukraine crisis.
Brent crude futures fell 13 cents, or 0.1%, to $92.84 a barrel by 12:26 p.m. EDT (1526 GMT), extending a 1.9% drop from the previous session.
U.S. West Texas Intermediate (WTI) crude futures shed 68 cents, or 0.7%, to $91.08 a barrel after sliding 2% on Thursday.
Both benchmark contracts hit their highest levels since September 2014 on Monday, but the prospect of an easing of oil sanctions against Iran has set prices on course for their first weekly fall in nine weeks.
Oil rose into positive territory earlier on the session on Russian media reports that a car had been blown up near their government building in the centre of the city of Donetsk, signifying ground conflict had begun.
“All eyes are on Russia and the market is watching for signs that violence might be occurring,” said John Kilduff, partner at Again Capital LLC in New York.
U.S. President Joe Biden will give an update on the Russia-Ukraine situation at 4 p.m. (2100 GMT) on Friday, the White House said.
Fears over possible supply disruptions resulting from the Russian military presence at Ukraine’s borders have limited losses this week.
However, a deal taking shape to revive Iran’s 2015 nuclear agreement with world powers lays out phases of mutual steps to bring both sides back into full compliance, and the first does not include waivers on oil sanctions, diplomats say.
Consequently, there is little chance of Iranian crude returning to the market in the immediate future to ease current supply tightness, analysts said.
Tight oil supplies pushed the six-month market structure for Brent crude to its widest backwardation on record on Wednesday.
Backwardation exists when contracts for near-term delivery are priced higher than those for later months and is reflective of near-term demand that encourages traders to release oil from storage to sell it promptly.
OPEC+, which comprises the Organization of the Petroleum Exporting Countries and allies including Russia, will work to integrate Iran into its oil output pact should Tehran and world powers reach agreement on reviving their nuclear deal, sources close to the group said.
Oil extends losses as heads for weekly fall on Iranian oil hopes
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