Market Reacts to US-Iran Nuclear Deal Prospects, Oil Prices Decline

Oil prices fall on US-Iran deal hopes and surprise US crude stock build, raising oversupply concerns.

Fears of an excess were heightened by an unexpected rise in US crude oil stocks last week, and oil prices fell by almost $1 in early trade on Thursday due to expectations of a potential nuclear agreement between the United States and Iran. WTI oil futures saw a 92-cent decline in price, while Brent crude futures saw an 88-cent decline.

Both benchmarks experienced losses of about 0.8% on Wednesday. An Iranian official told NBC News that Iran is willing to negotiate with the US in exchange for lifting economic sanctions.

Yuki Takashima, an economist at Nomura Securities, said the new selling was motivated by expectations that a nuclear agreement between the United States and Iran will ease recently tightened US sanctions on Iran and perhaps improve the global petroleum supply-demand balance. Prince Faisal bin Farhan Al-Saud, the kingdom's foreign minister, stated on Wednesday that Saudi Arabia is in complete support of and thinks the US-Iran nuclear negotiations would be successful.

According to the US Treasury Department, Washington imposed penalties on Wednesday to target Iranian efforts to produce ballistic missile components domestically, after sanctions on Tuesday on roughly 20 companies in a network that has allegedly been smuggling Iranian oil to China for a long time. The sanctions were put in place after a fourth round of US-Iranian talks to settle differences over Iran's nuclear program took place in Oman.