Brent Slides Lower On Iran/US Talks
Brent crude oil slid below $109 as talks between Iran and six other world leaders got underway. The commodity traded at $108.34 at 7:00 GMT on Thursday morning.
After years of conflict with the US over its nuclear capabilities, the Iranian government is willing to sit down with Western leaders resolve the problem diplomatically. Iranian exports have long been depressed by sanctions designed by the West to deter the country from advancing its nuclear development program. If the issue is resolved, it could mean the end of the sanctions and an influx of Iranian oil to the market.
When Iranian President Hassan Rouhani and US President Barack Obama failed to meet for a handshake at the UN's General Assembly, many worried that there was no hope of salvaging the two's troubled relationship. However, CNBC, reported that the Iranian government said on Wednesday that it wanted to jump-start the talks and resolve the dispute within the next three to six months. The commitment to a diplomatic resolution weighed on Brent prices as some of the commodity's risk was lifted.
News that the US, Russia, France, China and Britain have agreed on a plan to destroy Syria's chemical weapons also chipped away at some of the geopolitical tension supporting Brent prices. Although Syria itself does not produce oil, its central location in the fragile Middle East has linked it to the stability of the entire region.
Oil inventory data from the US showed a rise of 2.6 million barrels to 358 million barrels for the week ending on September 20. The data, from the US Energy Information Administration, helped push oil prices lower as it became apparent that the market was well supplied.
(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.