Oil prices are frozen in anticipation of changes

20 May 08:08

On Tuesday, oil prices remained virtually unchanged, "Komersant Ukrainian" reports citing Reuters. The reason for this is that traders continue to weigh the impact of several key factors: a possible breakdown in talks between the US and Iran over Tehran’s nuclear program, steady physical demand in the Asian market, and cautious forecasts for the macroeconomic situation in China.

Thus, according to OilPrice.com, futures for Brent crude oil slightly decreased by 2 cents, reaching $65.52 per barrel as of 07:12 Kyiv time. At the same time, futures for US West Texas Intermediate (WTI) rose by only 5 cents to $62.74 per barrel.

According to state media, Iran’s Deputy Foreign Minister Majid Takhtravanchi said on Monday that negotiations on the country’s nuclear program “will lead nowhere” if Washington insists on a complete cessation of Tehran’s uranium enrichment activities. This statement came after U.S. Special Envoy Steve Witkoff reiterated on Sunday that Washington will demand that any new agreement include a pact to abandon uranium enrichment, which is a prerequisite for the development of nuclear weapons.

According to StoneX analyst Alex Hodes, a successful deal would pave the way for the easing of US sanctions and allow Iran to increase oil exports by 300-400 thousand barrels per day.

Prices were also supported by expectations of strong physical demand in the short term amid healthy refining margins in Asia.

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“The Asian purchasing cycle has started very slowly, but strong margins and the completion of maintenance should still support the market,”

– said Sparta Commodities analyst Neil Crosby.

Singapore’s integrated refining margins, a regional benchmark, held at over $6 per barrel on average in May, according to LSEG, which is significantly higher than the April figure of $4.4 per barrel.

Additional pressure on oil prices came from data showing a slowdown in industrial production and retail sales in China, the world’s largest oil importer. Analysts predict a further slowdown in fuel demand.

At the same time, the downgrade of the US sovereign rating by Moody’s worsened the economic prospects of the world’s largest energy consumer, which restrained the growth of oil prices. The rating agency downgraded the US credit rating by one notch on Friday, citing concerns about the growing public debt, which has reached $36 trillion.

In a note to clients, BMI analysts predicted a 0.3% year-on-year decline in oil consumption in 2025 due to a slowdown in all categories of oil products.