Oil rebounded from a seven-month low as world powers and Iran struggled to overcome disagreements at their second round of meetings on the country’s nuclear program.
Prices climbed as much as 1.8 percent after the meeting resulted in no binding pledges from Iran to ensure the nation’s nuclear work is peaceful. Chinese, French, German, Russian, U.K. and U.S. negotiators -- the so-called P5+1 group -- are pressuring Iran to immediately halt production of uranium enriched to 20 percent, according to diplomats at the talks.
“The one thing that is clear is that there won’t be a quick and easy resolution to the nuclear standoff with Iran,”said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “People were looking for a chance to buy into the market after the big selloff.”
Crude for July delivery gained $1.29, or 1.4 percent, to $91.19 a barrel at 11:44 a.m. on the New York Mercantile Exchange. It’s the fourth time prices have risen this month. Futures settled at $89.90 a barrel yesterday, the lowest closing price since Oct. 21.
Brent oil for July settlement rose $1, or 0.9 percent, to $106.56 a barrel on the London-based ICE Futures Europe exchange.
The European Union’s foreign policy chief, Catherine Ashton, and Iran’s top negotiator Saeed Jalili delayed a scheduled press conference to reconvene a meeting of all seven countries at the talks, her spokesman, Michael Mann, told reporters. The sides may meet again in Geneva in three weeks, Iran’s state-run Mehr news agency said without citing anyone.
‘Atmosphere of Optimism’
“There is progress, there is an atmosphere of optimism after the Western powers responded to our requests,” Taleb Mahdi, a member of Iran’s delegation in Baghdad, said in an interview.
The P5+1 group has been meeting with Iran since yesterday to try to overcome disagreements over how to ensure the Islamic republic’s atomic work is peaceful and forestall possible military strikes.
“The geopolitical uncertainty is back in the marketplace,” said Phil Flynn, an analyst at futures brokerage PFGBest in Chicago. “Technically, there is a lot of support below $90.”
Iran and the P5+1 yesterday had the most detailed discussions since the latest round of negotiations began in February, according to a senior U.S. official who spoke on condition of anonymity because of the talks’ sensitivity.
The meeting was held in an effort to prevent possible military strikes against Iran, a prospect Israel hasn’t ruled out. The first round of discussions was held April 14 in Istanbul.
“This is a very calculated negotiation by Iran,” said Rich Ilczyszyn, chief market strategist and founder of Iitrader.com in Chicago. “Any hair-trigger comments and the market will spike.”
While the Islamic republic, target of a probe by the United Nations International Atomic Energy Agency since 2003, denies it wants to make nuclear weapons, it has refused to fully cooperate with inspectors and has been hit with international sanctions.
Oil prices rose earlier this year as tightening sanctions on Iran curtailed the country’s exports to Europe and raised the threat of a possible interruption of oil tanker traffic in the Persian Gulf.
Iran produced an average of 3.28 million barrels a day of crude in April, according to estimates compiled by Bloomberg.Saudi Arabia, the biggest producer in the Organization of Petroleum Exporting Countries, pumped 9.8 million a day.
Iran has threatened to close the Strait of Hormuz, the transit point for about 20 percent of globally traded oil, in reaction to the sanctions.
Oil reduced gains earlier after data showed U.S. orders for computers, machinery and other capital equipment dropped in April for a second month, pointing to a slowdown in business investment.