Oil prices tumbled more than 7% to their lowest in almost three weeks on Tuesday as supply disruption fears eased and surging Covid-19 cases in China spurred demand concerns.
Brent futures fell $7.89, or 7.4%, to $99.01 a barrel by 11:51 a.m. EDT , while U.S. West Texas Intermediate crude dropped $8.11, or 7.9%, to $94.90 a barrel.Both contracts moved the closest to oversold territory since December. They had been in overbought conditions as recently as early March, when the benchmarks reached 14-year highs after Russia's invasion of Ukraine. Since then, Brent has lost about $40 and WTI has fallen by more than $30.
The talks to revive the nuclear accord, which would lead to sanctions on Iran's oil sector being lifted and allow Tehran to resume crude exports, had recently stalled because of Russian demands. In the fallout from Russia's invasion, which it calls a"special operation," Western sanctions against Russia have failed to deter China and India from buying Russian crude."Whilst reports of promising talks are to be welcomed, it is hard to see how either side at this stage would be prepared to make concessions that would be acceptable to any party," said a research note from Kpler.
Meanwhile, the U.S. Federal Reserve is widely expected to raise interest rates by 25 basis points on Wednesday for the first time in four years to fight soaring inflation. Such a move could strengthen the U.S. dollar and dampen demand for commodities priced in the currency.
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