Oil Prices Pull Back as Trump Signals Willingness to Meet With Iran

26/08/2019 18:17:26 Commodities

Investing.com – Crude oil erased gains Monday on fears a fresh wave of supply could hit the market after President Donald Trump said he is open to meeting Iran's President Hassan Rouhani “under the right circumstances.”

On the New York Mercantile Exchange crude futures fell nearly 1% to $53.64 a barrel, while on London's Intercontinental Exchange, Brent for November delivery slipped 68 cents, or 1.2%, to $58.12 a barrel. Both benchmarks had traded more than 1% higher intraday before falling back on the Iran news.

“If the circumstances were correct or right, I would certainly agree to that,” Trump said when asked whether he would agree to a meeting with the Iranians. “But in the meantime, they have to be good players,” he added.

The warmer remarks on Iran sparked oversupply fears, with investors appearing concerned that a potential meeting could lead to an Iran deal, eventually culminating in an end to sanctions on the Islamic Republic, lifting global supply.

The U.S. pulled out of the Iran nuclear deal last year, paving the way for sanctions to resume on Tehran’s energy sector.

Nearly 2.7 million barrels a day of Iranian oil has been removed from global markets in the wake of Washington's decision to resume sanctions on all purchases of Iran's crude, U.S. Secretary of State Mike Pompeo said last week.

With oversupply fears front and center once again, oil prices reversed early gains, generated from renewed hopes the U.S. and China were ready to resume trade talks.

Trump said that he thinks Beijing wants to make a deal “very badly.”

The comments came after the president said U.S. trade officials received overnight calls from the Chinese saying Beijing was ready to resume trade talks.

Beijing's Foreign Ministry spokesman Geng Shuang said, however, that he had no knowledge of an outreach by his government.

Beyond trade issues, investors will be monitoring Tropical Storm Dorian, which became the fourth named storm of the 2019 Atlantic Hurricane season over the weekend.

While the storm is expected to miss the rich oil fields in the Gulf of Mexico, it is expected to pass over Puerto Rico Wednesday and arrive near southeast Florida around Friday. But no projected route is a certainty, according to the National Hurricane Center.