By Barani Krishnan
Investing.com -- U.S. oil prices hit their highest levels since the 2008 financial crisis, with global crude benchmark Brent not too far behind at 2012 peaks, as the mother lode of sanctions on Russia for its invasion of Ukraine sent energy prices skyrocketing for a third straight day.
U.S. crude’s West Texas Intermediate, or WTI, benchmark was down $1.07, or almost 1%, at $109.53 a barrel by 12:52 PM ET (17:52 GMT), after reaching a September 2008 high of $116.50.
The most-actively traded contract on global crude benchmark Brent, meanwhile, slid by $1.04, or also around 1%, to $111.89 a barrel. Brent’s intraday peak of $119.78 was the highest since May 2012.
Oil’s retreat came from intermittent headlines throughout the day on the progress in talks between Iran and global powers to reactivate Tehran’s 2015 nuclear deal that could free the Islamic Republic itself from U.S. sanctions on its oil.
“What we're probably seeing here is some profit-taking because the price has risen so far so fast,” said Craig Erlam, analyst at online trading platform OANDA.
But Erlam also said he would be surprised if oil’s upward trek doesn't resume without fundamental improvements to the global supply of crude.
“That could temporarily come from a nuclear deal with Iran,” he said, adding that “even this would not be enough to offset a disruption to Russian exports”, which provide about a tenth of the world’s oil needs.
For what it was worth, Russia’s envoy to Iran nuclear talks, Mikhail Ulyanov, said negotiators were “on the finish line”. Both WTI and Brent tanked about $2 a barrel each after that headline.
“A couple of issues need to be settled, and the deal can be done in 24/48 hours,” Ulyanov said.
The Russian envoy, who has sat in on the Iran nuclear talks amid the war waged by his president Vladimir Putin against Ukraine, has been saying all along that there was a “very high probability” that the disagreement between Washington and Tehran on the 2015 atomic accord will be resolved.
At stake for global crude trade is the legitimate return of a million barrels or more of Iranian crude to the market — although Tehran is probably already exporting as much by evading the Trump-era sanctions on its oil which the Biden administration hasn’t shown much keenness in enforcing.
Iran’s crude exports were averaging 2.4 million barrels per day, with a peak of more than 2.8 million, before Trump canceled in 2018 the nuclear deal endorsed by his predecessor Barack Obama.