Deutsche Bank analysts note that Brent crude made up about half of Monday’s keen decline as optimism about a potential U.S.-Iran deal faded slightly before falling again in early trading. They highlight how changing expectations for the Iran deal and the associated supply risks are causing two-way moves in the oil market, with prices still several dollars below Friday’s close.

Variations in the Iran deal augment the volatility of Brent crude oil

“There has been little definitive news on Iran this week, leaving the impression that an agreement may not yet be as close as expected over the weekend. But talks appear to remain on track despite the targeted U.S. strikes we reported yesterday. Iran’s Tasnim news agency reported that Tehran wants to release half of its $24 billion in frozen assets once an agreement is reached, which was the focus of Iran’s chief negotiator Ghalibaf’s visit to Qatar that ended yesterday. “

“On the U.S. side, Secretary of State Marco Rubio said it would “take several days” to agree on specific language in the draft agreement, emphasizing the U.S. demand that the Strait of Hormuz “be open, unobstructed and without tolls.” There was also immediate uncertainty about Hormuz, as the WSJ reported that the U.S. Navy was currently assisting ships in transiting the strait, but U.S. Central Command later denied that it had resumed escorting ships.”

“That helped mostly sustain global sentiment over the past 24 hours, even as lingering questions about the prospects for a U.S.-Iran deal caused Brent crude, +3.58% to make up about half of Monday’s decline.”

“Against this backdrop, oil markets have somewhat tempered Monday’s optimism that a deal may be imminent, with Brent crude (+3.58%) reversing about half of Monday’s -7.15% decline.

“However, this morning Brent crude fell 1.57% to $98.02/bbl, leaving it approximately $5.50 below Friday’s close ($103.54).”

(This article was created with the lend a hand of an artificial intelligence tool and has been reviewed by an editor.)