Oil prices drop 2% after Joe Biden discusses Iran nuclear deal with European leaders
MANDEL NGAN/AFP via Getty Images
- Oil prices fell 2% Monday as traders weighed signs of progress on an Iran nuclear deal, and economic concerns lingered.
- US President Joe Biden spoke to European leaders about the deal at the weekend, the White House said.
- Crude prices have tumbled back to levels last seen before Russia invaded Ukraine as global growth has slowed.
Oil prices fell 2% Monday as traders weighed up signs of progress on a new Iran nuclear deal, and as concerns about the global economy lingered.
Brent crude, the global benchmark, was down 1.56% to $95.21 a barrel as of 4.45 a.m. ET, having fallen 2% earlier in the session. The US benchmark WTI crude dropped 1.43% to $89.47 a barrel.
US President Joe Biden talked about the Iran nuclear deal with European allies over the weekend, the White House said. If a deal is signed, Iran is likely to step up its oil production and exports, providing extra supply to the market as the world grapples with energy shortages.
Biden and the leaders of France, Germany and the UK "discussed ongoing negotiations over Iran's nuclear program, the need to strengthen support for partners in the Middle East region, and joint efforts to deter and constrain Iran's destabilizing regional activities," the White House said Sunday.
The European Union has been pushing to revive the deal scrapped by then-US President Donald Trump, under which Iran promised to limit its nuclear ambitions in exchange for the removal of sanctions. Last week, Iran said it was happy to move ahead with talks along the lines proposed by the EU.
Oil prices have now fallen back to levels last seen before Russia invaded Ukraine in late February, when the shock pushed Brent crude as high as $139 a barrel.
"Brent crude is trading at around $96 a barrel, with declines extended from last week. Traders are chewing over the prospect of more Iranian supply following US President Joe Biden's discussions with European allies about reviving the 2015 nuclear deal," Sophie Lund-Yates, analyst at broker Hargreaves Lansdown, said.
The key catalyst for the drop has been expectations that the world economy will slow sharply in the coming months as inflation soars and central banks hike interest rates. That will slash the demand for fuel.
"Extra supply is meeting a wider sell-off which has been in motion since June, which was triggered by increased concerns over a global slowdown, which would dent demand for the black stuff," Lund-Yates said.
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