Oil Prices Extend Rebound After Iran Nuke Deal Comments

Oil prices had rebounded strongly overnight from the “panic” Omicron variant depths as the fearmongering from officials was beaten back by reality from science. WTI had held steady for a few hours until headlines hit as US-Iran nuclear talks resumed in Vienna. While there were already low expectations for progress, comments from the Iran Foreign Minister Hossein Amirabdollahian that Tehran will not accept any request beyond JCPOA suggests strongly that no Iranian oil will be flowing back online anytime soon.

That sparked a new wave of buying in WTI…

As a reminder, here’s Goldman from Friday on the over-reaction in crude prices:

…a worst-case outcome means oil is fairly priced at $80. At its closing price below $73 it’s a steal.

On the other hand, there is substantial potential for offsetting bullish developments via the lack of progress in Iranian negotiations (where things are going nowhere fast and where Goldman had expected a supply ramp up beginning in 2Q 22), as well as OPEC+ freezing its production hike for three months (instead of one) which would completely offset the combined negative hits of both another large Covid wave and SPR releases.

Meanwhile, the Iranian Foreign Minister is reportedly to visit China “soon” to discuss 25-year strategic agreement and bilateral relations, foreign ministry spokesman Saeed Khatibzadeh says in televised press conference.