Brent Above $109 As Doubts About US/Iran Relationship Surface
Brent crude oil climbed back above $109 as some began to doubt that the relationship between the West and Iran has the potential to improve. The commodity traded at $109.14 at 7:00 GMT on Wednesday morning.
Tension between the West and Iran has long supported oil prices as Iran moved forward with its disputed nuclear program. In an effort to keep the nation's nuclear capabilities from advancing, Western diplomats sanctioned Iranian oil and cut its exports by over 1 million barrels per day.
When Iranian President Hassan Rouhani expressed a willingness to negotiate with other world powers about Iran's use of nuclear technology, many saw it as an olive branch that could be a turning point in the icy relationship between the US and Iran. The two are expected to meet on Thursday alongside representatives from six other world powers to discuss the issue.
However, Reuters reported that cracks in their fragile relationship were revealed at the United Nations General assembly when the two failed to meet for a simple handshake. Rouhani has denied any ill feelings and said the failure to meet was simply a scheduling issue.
Gains were mitigated by improving supply from the Middle East. Iraq ramped up its exports after fixing a leaking pipeline and Libya worked to resolve labor issues which have closed several of its largest export terminals.
US crude stocks fell less than expected according to data from the American Petroleum Institute. On Tuesday the organization released a report that showed US stocks down by 54,000 barrels, less than analysts' prediction of a 1.1 million barrel drop.
Moving forward investors will have their eyes on data from the US Energy Information Administration, which is due out later on Wednesday.
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