But Goldman still sees a scramble to fulfill rising demand: File Image/Pixabay
The assumption that the world market may soon be flooded with oil from Iran sent crude traders into a panic Monday, and that coupled with the Organization of the Petroleum Exporting Countries (OPEC) agreeing to monthly production hikes from May to July caused a more than 5 percent drop in oil prices.
The source of unease was the indirect talks beginning Tuesday between Iran and the U.S. as part of negotiations to revive the 2015 nuclear deal: Henry Rome, analyst for Eurasia, said he expected U.S. sanctions, including restrictions on oil sales, to be lifted after these talks are completed and Iran returns to compliance.
The worries in trading circles eclipsed good news over the weekend that the U.S. economy created the most jobs in seven months in March: on Monday, Brent fell $3.08, or 4.8 percent, to $61.78 per barrel by 1:42 p.m. EDT (1742 GMT); West Texas Intermediate dropped $3.21, or 5.2 percent, to $58.24.
Bob Yawger, director of energy futures, Mizuho Securities
The timing was not good
Bob Yawger, director of energy futures at Mizuho Securities, remarked, "The timing was not good: it seemed like OPEC+ was going to roll the deal, but they didn't and now it looks like they're going to have to pay at least in the short term."
OPEC agreed to ease production curbs by 350,000 barrels per day (bpd) in May, another 350,000 bpd in June and further 400,000 bpd or so in July, due to Washington calling on Saudi Arabia to keep energy affordable despite demand concerns as parts of Europe remained under lockdown.
As for Iran, its foreign ministry said it wanted the U.S. to lift all sanctions and rejected any "step-by-step" easing of restrictions; Rome said nuclear compliance could take as long as three months and the implementation of a deal and a ramp-up of oil exports could stretch into early 2022.
Still, apparently undaunted by media headlines and loose speculation, Goldman Sachs Group Inc. saw "a lot more" output being needed over the northern hemisphere's summer to meet rising demand.