Oil prices fell this morning as talks to revive the aborted nuclear deal with Iran progressed in recent days.

That fueled hopes of new supplies flooding the market amid tight supply and continued OPEC+ production underperformance.

The United States is in the midst of the very final stages of indirect talks with Iran, State Department spokesman Ned Price said yesterday.

Both major benchmarks suffered losses, with Brent Crude falling 1.57% from $95 a barrel to $93.32, while WTI Crude fell 1.69% to 92.08 $.

With perhaps a new deal on the horizon, South Korea revealed it had held talks on resuming imports of Iranian crude oil and unfreezing Iranian funds.

South Korea was previously one of Tehran’s biggest oil buyers in Asia.

This follows sustained market rallies over the past seven weeks as tensions between Russia and the West have escalated, with fears the Kremlin could sanction an invasion of Ukraine, which is also heightening concerns. concerns about supply shortages in Europe.

Those lingering concerns – along with lingering confusion over whether Russia has withdrawn its troops from the border – capped losses and kept prices near historic seven-year highs, even after today’s setback.

Russia had this week announced a partial troop withdrawal near Ukraine, but was countered by Western governments warning that Russia was still building up its military presence near the Ukrainian border.

Meanwhile, Kremlin-backed rebels in eastern Ukraine claimed government forces used mortars to attack their territory on Thursday – in violation of agreements to avert conflict.

Ricardo Evangelista – senior analyst at ActivTrades, argued that sanctions against Russia would likely cause oil prices to hit the $100 mark for the first time since 2014.

He said: “Under current market conditions where supply is already tight, sanctions on Russian energy exports likely to be imposed after any dispute would create even more scarcity and could drive the price per barrel to the above the $100 mark.

Carsten Fritsch, an analyst at Commerzbank, described oil prices as “extremely volatile” and further noted the wide price differentials between first-month futures and subsequent Brent futures.

The price difference between the first-month Brent Crude contract and the contract due in six months is currently $8, and the first-month contract differs from the contract due in twelve months by more than $12.

This reflects fears of upcoming shortages in supplies, while premiums for short-term deliverable oil are now at eleven-year highs.

He explained, “In other words, market participants are willing to pay record premiums for near-term deliverable oil as they continue to expect delivery disruptions.”

Commerzbank also noted that the 1.1 million barrel increase in U.S. crude oil inventories last week, reported by the U.S. Department of Energy, only marginally caught the attention of investors.

It was further undermined by crude oil inventories at Cushing which fell another 1.9 million barrels, and US gasoline and distillate inventories also fell by 1.3 million and 1.6 million barrels respectively.

This is particularly painful for US President Joe Biden, who is desperate to raise oil prices and bring prices down to ease concerns over the cost of living ahead of the crucial midterm elections in November.