Oil Prices Dip After a Week of Gains

Crude oil prices started the week with a dip after booking a gain of 6% last week, fueled mostly by geopolitical factors as the war between Russia and Ukraine escalated.

At the time of writing, Brent crude was trading at $74.58 per barrel, with WTI at $70.65 per barrel.

At the same time, Iran changed its tune on enriched uranium in anticipation of tighter sanction enforcement by Washington after Donald Trump takes office in January. Bloomberg reported Tehran had said it would boost its capacity to enrich uranium after it received a censure from the International Atomic Energy Agency.

“The IAEA censure and Iran’s response heightens the likelihood that Trump will look to enforce sanctions against Iran’s oil exports when he comes into power,” Commonwealth Bank of Australia analyst Vivek Dhar told Bloomberg, adding some 1 million barrels daily in Iranian supply could be at risk of disruption.

The International Atomic Energy Agency last Thursday passed a resolution that ordered Iran to step up cooperation with the regulator, after the UK, France, Germany, and the United States dismissed Tehran’s recent pledge to cap its enriched uranium stocks as “insufficient and insincere”, according to Reuters.

It appears the resolution of the IAEA has had the exact opposite effect of the one intended, with Iran ordering a step-up in uranium enrichment following the resolution’s passing by the watchdog.

“Markets are concerned not only about damage to oil ports and infrastructure, but also the possibility of war contagion and involvement of more countries,” Phillip Nova analyst Priyanka Sachdeva told Reuters.

Tehran said yesterday it will hold talks with the UK, France, and Germany next Friday, to discuss its nuclear power program and likely the IAEA resolution.

“Oil prices are starting the new week with some slight cool-off as market participants await more cues from geopolitical developments and the Fed’s policy outlook to set the tone,” IG analyst Yeap Jun Rong told the publication.