Oil extends weekly drop as traders weigh more Iranian supply

Oil fell at the start of the week as investors weighed the prospect for more Iranian supply and the outlook for global economic growth.

Brent futures dropped around 1 per cent to trade below $96 a barrel, extending a weekly decline. President Joe Biden spoke Sunday with leaders from France, Germany and the UK about reviving a nuclear deal with Iran, which could lead to a surge in supply from the OPEC producer.

Crude has given up all of the gains since the Russia-Ukraine crisis in late February as fears over an economic downturn filtered through the market. A stronger dollar has also added to headwinds for commodities, while time spreads are signaling easing concerns over tight supply.

Biden and his European allies discussed “ongoing negotiations” toward a nuclear agreement, including “the need to strengthen support for partners in the Middle East region,” according to a US summary of the call released Sunday. Iran submitted its response on August 15 to a framework circulated by the EU for a deal, which the EU took as constructive.

Meanwhile, China’s Sichuan province extended industrial power cuts and activated its highest emergency response on Sunday to deal with “extremely outstanding” electricity supply deficiencies, adding to manufacturers’ woes in the region as they shut down factories.