[NEW YORK] Oil prices were little changed on Tuesday (May 20) due to uncertainty in US-Iran negotiations and Russia-Ukraine peace talks, while new government data delivered a cautious outlook for top crude importer China’s economy.
Brent futures slid 16 US cents, or 0.2 per cent, to settle at US$65.38 a barrel, while US West Texas Intermediate (WTI) crude slid 13 US cents, or 0.2 per cent, to settle at US$62.56.
Iran’s Supreme Leader Ayatollah Ali Khamenei said US demands that Tehran stop enriching uranium are “excessive and outrageous”, voicing doubts whether talks on a new nuclear deal will succeed.
A deal between Iran and the US would allow Iran to raise oil exports by 300,000 to 400,000 barrels per day if sanctions were eased, StoneX analyst Alex Hodes said.
Iran was the third-biggest crude producer in the Organization of the Petroleum Exporting Countries (Opec) group in 2024 behind Saudi Arabia and Iraq, according to US federal energy data.
The European Union and Britain announced new sanctions against Russia without waiting for the US to join them, a day after US President Donald Trump spoke to Russian President Vladimir Putin without winning a promise for a ceasefire in Ukraine.
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Ukraine wants the Group of Seven (G7) advanced economies to reduce their price cap on Russian seaborne oil to US$30 per barrel. The current G7 cap, imposed over Russia’s war in Ukraine, is US$60.
“An immediate resolution of the Russia/Ukraine war does, however, look unlikely. So while it could lead to more oil from Russia into the market, it is out in time and uncertain as Russia is still bound by its obligation to Opec+,” said Bjarne Schieldrop, chief commodities analyst at SEB, a Nordic bank.
An agreement to end the war between Russia and Ukraine could allow Moscow to export more oil to the world. Russia is a member of the Opec+ group of countries, which includes Opec and other producers.
Russia was the world’s second-biggest crude producer behind the US in 2024, according to US federal energy data.
Chinese data
At least seven Federal Reserve officials are scheduled to speak on Tuesday.
Traders currently expect the US central bank to deliver at least two 25-basis-point interest rate cuts in 2025, with the first expected in September, according to data compiled by financial services firm LSEG.
Central banks such as the Fed use interest rates to keep price inflation in check. Lower interest rates can spur economic growth and demand for oil by reducing consumer borrowing costs.
Data showing decelerating industrial output growth and retail sales in China piled more pressure on oil prices, with analysts expecting a slowdown in fuel demand from the world’s top oil importer.
The analysis, however, did not reflect a 90-day pause on tariffs between the US and China, with Goldman Sachs pointing to a pickup in China trade flows late on Monday.
In Germany, the biggest economy in Europe, Finance Minister Lars Klingbeil promised swift measures to boost investment amid global trade uncertainty.
US oil inventories
The American Petroleum Institute trade group and the US Energy Information Administration are due to release US oil inventory data on Tuesday and Wednesday, respectively.
Analysts forecast energy firms pulled about 1.2 million barrels of oil from US stockpiles during the week ended May 16.
If correct, that would be the third decline in four weeks. There was an increase of 1.8 million barrels during the same week last year, with the average decrease at 3.5 million barrels over the past five years (2020 to 2024). REUTERS