Iran refusing to budge on a key U.S. nuclear demand caused analysts to yet again reassess their hope that a deal to end the war between the two countries could be reached – and oil prices on Wednesday rebounded – albeit modestly - after two days of losses.
As of 0934 GMT, Brent gained $1.28 to $92.77 per barrel, and West Texas Intermediate climbed 76 cents to $86.80 per barrel.
Iran’s security chief, Mohsen Rezaei, said Tehran would not permit enriched nuclear material to leave the country, while Washington doubled down on its insistence that nuclear issues must be included in negotiations aimed at ending hostilities between the two countries.
Rezaei went on to deny that talks with Washington were occurring and called reports of a recent meeting in Qatar “pure lies” designed to push down oil prices.
To even casual observers, Iran’s commitment to any meaningful negotiations seemed questionable, especially in light of data cited by media showing that the Islamic republic was responsible for 37 commercial vessels attacked in or near the Strait of Hormuz during October, the highest monthly total since the war began.
Iran’s Revolutionary Guards navy separately claimed that two tankers caught fire after striking mines while navigating an “unauthorized” route.
Meanwhile, Saudi Arabia’s air defenses intercepted three cruise missiles launched by the Iran-backed Houthis toward the Riyadh region on Wednesday; this came in the wake of insurance company Allianz reporting that damage from Iranian strikes across Persian Gulf nations will cost an estimated $200 billion to repair.
Still, Iran’s aggression did not deter from reports that the global flow of oil has recovered to near-pre-war levels; meanwhile, U.S. crude availability also seemed robust after the American Petroleum Institute on Wednesday indicated that U.S. crude inventories increased 9 million barrels last week.
Stockpiles of distillates such as diesel, which had fallen below 100 million barrels for the first time since 2003, climbed by 1.5 million barrels, API said.
Pavel Molchanov, an analyst at Raymond James & Associates Inc., echoed the sentiments of many of his colleagues on Wednesday by remarking, “Insofar as the two sides may ultimately sign a deal with staying power, it’s likely to be a messy hodge-podge that leaves a lot of issues unresolved.”
He added, “But as long as the Strait of Hormuz ends up being reopened on a sustained basis, that’s what the oil market cares about.”
