Oil slipped to around $92 a barrel on Tuesday ahead of the resumption of indirect talks between the United States and Iran, which may revive a nuclear agreement that could eventually allow more oil exports from the OPEC producer.
A deal could allow over 1 million barrels per day of Iranian oil, equal to over 1 percent of global supply, back onto the market.
The talks over the nuclear deal will resume on Tuesday in Vienna.
“If sanctions against Iran are lifted, global crude oil supply may receive much-needed support,” said Naeem Aslam, chief market analyst at Avatrade.
Brent crude was down 73 cents, or 0.8 percent, at $91.96 a barrel by 0916 GMT, after hitting a seven-year high of $94 on Monday. US West Texas Intermediate crude fell 52 cents, or 0.6 percent, at $90.80.
Both benchmarks have found support this year from rising global demand, Russia-Ukraine tensions, supply disruptions in producers such as Libya and a slow easing of 2020’s record output cuts by OPEC and its allies.
Eight rounds of indirect talks between Tehran and Washington since April have yet to result in an agreement on resuming the 2015 nuclear deal.
Differences remain about the speed and scope of lifting sanctions on Tehran.
“Exports could resume swiftly if a nuclear deal is reached,” said Tamas Varga of broker PVM. “But it is a big ‘if’. The re-emergence of Iranian barrels is only a distinct possibility at this stage.”
Oil also came under pressure from the prospect of an increase in US crude inventories. Analysts estimate inventories have risen by 700,000 barrels in the week to Feb. 4.
The first of this week’s two supply reports, from the American Petroleum Institute, is out at 2130 GMT