Deutsche Bank analysts note Brent Oil retraced about half of Monday’s sharp fall as optimism over a potential US-Iran deal faded slightly, before slipping again in early trading. They highlight how shifting expectations around an Iran agreement and associated supply risks are driving two-way moves in Oil, with prices still several dollars below Friday’s close.

Iran deal swings drive Brent volatility

"On Iran, we’ve seen little definitive news flow this week, leaving a sense that a deal might not yet be as imminent as hoped over the weekend. However it seems talks remain on track despite the targeted US strikes we mentioned yesterday. Iran’s Tasnim news agency reported that Tehran wants half of its $24bn in frozen assets to be released upon reaching a deal, with the topic in focus during the visit by Iran’s chief negotiator Ghalibaf to Qatar, which ended yesterday. "

"From the US side, Secretary of State Marco Rubio said that “it’ll take a few days” to agree specific language in the draft agreement, emphasising the US demand for the Strait of Hormuz “to be open, unimpeded, without tolls”. There was also some immediate uncertainty over Hormuz, with the WSJ reporting that the US Navy was now assisting vessels through the strait but US Central Command later denying that it has restarted escorting ships."

"This has helped global sentiment mostly hold up over the past 24 hours, even as lingering questions over the prospects for a US-Iran deal led Brent crude (+3.58%) to pare back about half of Monday’s decline."

"This backdrop saw oil markets trim some of Monday’s optimism that a deal could be imminent, and Brent crude (+3.58%) reversed about half of Monday’s -7.15% decline."

"Brent is back down -1.57% at $98.02/bbl this morning though, leaving it around $5.50 below Friday’s close ($103.54)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)