By Biman Mukherji
HONG KONG--Talks over a possible relaxation of sanctions against
Iran that may increase global oil supplies kept crude-oil futures
near a week's low Monday, while a supply disruption due to Saudi
airstrikes on Yemen looked increasingly unlikely.
On the New York Mercantile Exchange, light, sweet crude futures
for delivery in May traded at $48.09 a barrel at 0502 GMT, down 48
cents in the Globex electronic session. May Brent crude on London's
ICE Futures exchange was nearly flat at $56 a barrel.
Investors awaited the outcome of a Tuesday deadline for talks
between Iran and six world powers over its nuclear program.
"Any relaxation of Iran oil sanctions could see increased
exports adding to swelling global supplies and further pressuring
prices," ANZ said.
Iran currently exports around one million barrels of oil per
day, but has been producing in excess of three million barrels per
day at various times over the past year and storing this in tankers
and onshore facilities, ANZ said, adding that the country may have
a stockpile of over 30 million barrels.
Prices had surged last week after Saudi Arabia and its allies
launched airstrikes against Iran-linked Houthi militants in Yemen.
But the threat of a potential disruption to oil supplies due to the
conflict now looks increasingly remote, with the fighting taking
place far from areas where oil tankers pass through.
"Just like most geopolitical events, the initial gains quickly
eroded without any physical disruption," a Morgan Stanley report
said.
Investors were also worried that the Saudi strike on Iran-backed
rebel groups in Yemen may jeopardize the talks over Iran's nuclear
program, but those fears appear misplaced, analysts said.
The drop in oil prices combined with strong refinery margins
would likely boost demand from Asian buyers such as China and
India, which are looking to build reserves to take advantage of
cheaper supplies.
Write to Biman Mukherji at biman.mukherji@dowjones.com