Oil falls from 7-yr highs on positive signals from U.S.-Iran talks

News wire — Oil prices fell from seven-year highs on Monday on faint signs of progress in nuclear talks between the United States and Iran, which could lead to the removal of U.S. sanctions on Iranian oil sales.

Crude prices extended their rally last week into a seventh week on ongoing worries about supply disruptions fueled by frigid U.S. weather and ongoing political turmoil among major world producers.

Brent crude was down 55 cents, or 0.6%, at $92.72 by 1:59 p.m. EST (1859 GMT), having earlier touched its highest since October 2014 at $94.

U.S. West Texas Intermediate crude fell $1.23, or 1.3%, to $91.08 after touching $92.73.

U.S. President Joe Biden’s administration on Friday restored sanctions waivers to Iran to allow international nuclear cooperation projects as talks on the 2015 international nuclear deal enter the final stretch.

Although the sanctions relief will have limited impact on Iran’s struggling economy, the move was perceived by markets as a signal that both sides are determined to reach a deal.

Speaking on condition of anonymity, a European official said top envoys to the Vienna talks – which are indirect because Iran has so far refused to sit down with U.S. diplomats – were likely to meet on Tuesday in the Austrian capital.

Iran could quickly export millions of barrels of crude and help to drive down red-hot oil prices if U.S. sanctions are lifted.

“Besides the feel-good vibe coming from the negotiations, the Biden administration is feeling pressure to lower inflation, and the fastest way to do that would be to lower energy prices,” said Bob Yawger, director of energy futures at Mizuho.

Crude prices, which have rallied about 20% this year, are likely to surpass $100 a barrel because of strong global demand, analysts have said.

However, the relative strength index (RSI), a measure of momentum, shows the oil market is currently overbought, and ripe for a pullback.

Fuelling supply concerns, tensions remain high in Eastern Europe, with White House national security adviser Jake Sullivan saying on Sunday that Russia could invade Ukraine within days or weeks but might still opt for a diplomatic path.