Brent gains as US-Iran nuclear talks falter

The front-month ICE Brent contract has moved $0.47/bbl higher on the day, to trade at $65.46/bbl at 09.00 GMT.

IMAGE: Getty Images

Upward pressure:

Brent’s price has moved higher amid signs that the US-Iran nuclear negotiations may be faltering.

Washington has said that any deal with Tehran must include an agreement that suspends Iranian uranium enrichment. "We have one very, very clear red line, and that is enrichment. We cannot allow even 1% of an enrichment capability," Reuters cited US special envoy Steve Witkoff saying.

“Iranian nuclear talks appear to be hitting some stumbling blocks,” two analysts from ING Bank noted.

If the two countries had moved closer to striking a nuclear deal, it would raise prospects for the US to lift sanctions on Iranian oil supplies. “However, the latest developments demonstrate that reaching a deal won’t be easy,” the two ING Bank analysts added.

Downward pressure:

Oil came under pressure as weaker economic outlooks for the US and China – the world’s two largest oil consumers – weighed on demand sentiment.

Credit ratings agency Moody’s has downgraded US sovereign credit rating from "AAA" to "Aa1", citing concerns about the country’s growing $36 trillion debt pile, Reuters reports.

This news could further delay the US Federal Reserve (Fed) from cutting interest rates this year. Higher interest rates in the US could, in turn, dampen demand for dollar-denominated commodities like oil, making it costlier against other currencies.

Brent has been under some downward pressure after the latest Chinese economic data showed a slump in industrial output and retail sales, raising demand growth concerns for the world's top oil importer.

“Weaker demand [in China] coincides with rising US-China trade tensions following Liberation Day,” the ING Bank analysts said.

By Aparupa Mazumder

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