Brent crude is heading towards its biggest weekly decline since March, as the market braces for the possibility of further Iranian crude oil flows as Tehran approaches the revival of the nuclear deal.
London oil futures are trading near $ 65 a barrel, after falling more than 6% over the past three sessions.
Iranian President Hassan Rouhani said that world powers have accepted the lifting of major sanctions on his country, although the details and finer points still need to be settled.
Oil was also drifting into a widespread sell-off of commodities on Thursday, after concerns about inflation and speculation that the US Federal Reserve will ease the stimulus along with China's warnings about measures to calm the price hike.
Oil is still up by more than 25% this year, as a strong recovery from the epidemic in the United States, China and parts of Europe boosts optimism about the outlook for fuel demand, even as the virus re-spreads in Asia.
As Iran moves closer to increasing its crude oil exports, Citigroup is confident that the market will be able to absorb the additional barrels, and that prices will continue to rise.
“I think prices are likely to remain under pressure, until there is some clarity about easing US sanctions on Iranian oil,” said Daniel Hines, chief commodities analyst at Australia and New Zealand Banking Group Ltd.
On Thursday, Rouhani said that negotiators in Vienna - where Iran and the United States were engaged in indirect talks to restore the nuclear deal that former President Donald Trump abandoned in 2018 - have taken a "big step," according to Iranian television.
Under the most optimistic forecasts, OPEC member Iran could increase production to 4 million barrels per day from about 2.4 million within a few months.
[You must be registered and logged in to see this link.]