Oil Tumbles as Traders Weigh Iran Talks Progress, Ukraine Crisis

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© Bloomberg. Storage tanks at the Oiltanking Deutschland tank farm in Berlin, Germany, on Friday, Feb. 4, 2022. Oiltanking GmbH Group confirmed that along with Mabanaft GmbH & Co. KG, its systems were affected by a cyberattack, but all its terminals in global markets continue to function safely, it said, without elaborating. Photographer: Krisztian Bocsi/Bloomberg
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(Bloomberg) — Oil tumbled in Asia on signs an Iranian nuclear deal could be close, while the market continued to monitor the standoff over Ukraine.

West Texas Intermediate fell almost 3% after closing above $93 a barrel Wednesday. Iran’s top negotiator, Ali Bagheri Kani, tweeted that efforts to restore the deal are “closer than ever” to agreement, although the U.S. State Department was more circumspect. French Foreign Minister Jean-Yves Le Drian said the parties have days left to reach a deal or a “crisis” looms.

In Europe, Russia has insisted that it’s serious about easing tensions over Ukraine, but the West remains to be convinced about a pullback of troops. An emergency summit of European leaders on the situation is set for later Thursday. Moscow has repeatedly denied that it plans an invasion.

Crude rallied to the highest since 2014 this week as demand picked up and the Ukraine crisis added a risk premium. Should a deal with Iran be concluded, it could pave the way for a resumption of sanctions-free crude exports, augmenting global supplies and easing tightness in the market. 

There have been further signs this week that oil consumption has been outpacing supply, helping near-term prices trade at a premium to longer-dated ones. On Wednesday, data showed that inventories at the key U.S. storage hub at Cushing, Oklahoma, sank to the lowest since 2018.

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