By Gina Lee
Investing.com – Oil was down on Tuesday morning in Asia. The black liquid eased ahead of the resumption of U.S.-Iran talks that could revive a nuclear deal and also remove sanctions on Iranian oil sales.
Brent oil futures were down 0.35% to $92.37 by 11:37 PM ET (4:37 AM GMT) and WTI futures were down 0.24% to $91.10. Both Brent and WTI futures recently hit seven-year highs, boosted by strong global fuel demand, ongoing tensions in Eastern Europe, and potential supply disruptions due to cold U.S. weather conditions.
Talks to revive the 2015 Iran nuclear deal in Vienna are due to resume later in the day, after a 10-day pause. Although the U.S. has currently restored some sanctions waivers, Iran is demanding a full removal of sanctions and a guarantee that the U.S. will take no further punitive steps.
"Crude oil futures eased lower as the specter of Iranian oil hitting the market weighed on sentiment," ANZ Research analysts said in a note, which also noted that negotiators had cited "progress" in reaching a deal that would "ultimately restore the nation's sanctioned oil" to global markets.
"Nevertheless, more bullish signals continue to emerge for oil," the note added, pointing to Saudi Arabia raising its oil prices and the unexpected shutdown of a U.S. refinery.
The ease in oil prices, however, could be temporary. While optimism over the U.S.-Iran talks spurred some profit-taking, the price weakness will likely be short-lived as the oil market remains in a supply deficit, said OANDA analyst Edward Moya.
"With crude demand expected to steadily improve throughout the rest of the year, the oil market is completely being driven by both supply-side and geopolitical risks," he added.
Saudi Aramco (SE:2222) said on Saturday it had hiked prices for all crude grades it sells to Asia in March 2022 from February. The decision was as per market expectations, reflecting both firm demand in the region as well as stronger margins for gasoil and jet fuel.
Meanwhile, in the U.S., production at Texas’ refineries was hit by Friday’s citywide power outage, as a cold front swept the Gulf Coast. However, some of these refineries are on the road to recovery or have since returned to near-normal operations.
Investors now await U.S. crude oil supply data from the American Petroleum Institute, due later in the day.