Crude oil prices see-saw amid hopes of Iran nuclear deal, supply woes linger

Iran is preparing for a ramp-up in exports, and state refiner NIOC has started to reach out to former key customers in India and South Korea

Crude prices declined in volatile trading on Thursday as investors assessed the potential for new supply in the tight markets amid prospects of a new Iran deal.

Brent futures were down 58 cents, or 0.48%, at $121.02 a barrel and US West Texas Intermediate futures fell 96 cents, or 0.84%, to $113.97 a barrel at 0502 GMT. Both contracts rose $2 and $1, respectively, in early trade.

White House national security adviser Jake Sullivan said on Wednesday the United States and its allies have made progress in Iran nuclear talks but issues remain.

"A lifting of Iranian export restrictions would help alleviate the immense tightness prevalent in crude markets right now," consultancy JBC Energy said in a note.

Iran is already preparing for a ramp-up in exports, and the state refiner NIOC has reportedly started to reach out to former key customers in India and South Korea, the note added.

Both contracts have posted steep gains this week, with Brent futures up more than $14 a barrel, or 13%, since Monday and WTI climbing over $10 a barrel, or 10%, as worries over supply disruptions intensified following Russia's invasion of Ukraine.

Oil markets jumped more than 5% on Wednesday following reports that crude exports from Kazakhstan's Caspian Pipeline Consortium (CPC) terminal had completely halted following storm damage. Russia's deputy prime minister said oil supplies could be stopped for two months.

US President Biden is meeting with NATO allies on Thursday and is expected announce additional sanctions on Russia over its actions in Ukraine, which Moscow calls a "special operation".

Meanwhile, stockpiles in the US fell by 2.5 million barrels last week while inventories from the US Strategic Petroleum Reserve declined by 4.2 million barrels, according to data from the US Energy Information Administration. Market participants had expected a modest increase in supplies.

US oil production remained flat at 11.6 million barrels per day, according to EIA data.

"The oil market is very tight and with US production remaining steady and as stockpiles continue to decline, oil prices have only one way to go," Edward Moya, a senior market analyst with OANDA, wrote in a note.

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