Brent crude edged down near $108 per barrel on Tuesday as geopolitical tensions eased slightly ahead of nuclear talks involving Iran and the US later this week, while rising oil supply from Iraq and Libya weighed on prices.
Iran has agreed to new talks on its nuclear programme with top diplomats from six world powers, including US Secretary of State John Kerry, raising hopes that Tehran’s relations with the US could thaw.
US officials have also said a meeting is possible this week between President Barack Obama and Iran’s new centrist president, Hassan Rouhani.
“Geopolitical tensions are reducing and oil output is rising so these two factors are driving oil futures to moderate,” Reuters quoted IHS analyst Victor Shum as saying.
Brent crude for November delivery edged down 11 cents to $108.05 per barrel by Tuesday morning, after settling at its lowest close in four sessions on Monday.
November US crude was off 18 cents at $103.41 per barrel, down for a fourth day after touching a six-week low in the previous session.
Investors are closely watching for any signs of easing tensions between Iran and the US. Sanctions from the West aimed at ending Tehran’s nuclear programme have sharply reduced Iranian oil exports over the past two years.
“The geopolitical tone over Iran has been dialled down. The other development is the continuing progress over Syria’s situation,” Shum said, adding that these developments have reduced geopolitical premiums in oil prices.
The United Nations may back a US-Russian plan to rid Syria of chemical arms this week.
Syria is not a major oil producer but traders always worry that any escalation of violence in the Middle East could disrupt oil flows.
Mesanwhile, oil supply has improved as Iraq boosted output from its Rumaila field after plugging a leaking pipeline, although planned work continued to keep a lid on exports from Opec’s number two producer after Saudi Arabia.
Libya is also gradually ramping up output after protests crippled its oil sector. The Opec producer could reopen its eastern Hariga port this week but there was no progress opening larger eastern terminals that have been shut for weeks, a senior government official said on Monday.
In global financial markets, the uncertainty about when the US Federal Reserve will start trimming its massive stimulus programme kept investors on the edge.
Information from Upstream was used in this report.