Waiting for Iran

Crude oil prices are levelling off and even retreating a little this morning: Brent 1st nearby is back down to $92/b after touching $94/b yesterday. It is the resumption of negotiations on the Iranian nuclear issue in Vienna today that is making the markets cautious. According to the Russian authorities, an agreement is close, while the US is much more reserved (but this is logical on both sides, as the negotiations are at the heart of the matter). Certainly the surge in US pump prices and the potential for limited oil production increases from both OPEC and the US in the short term probably leads the Biden administration to consider that a return of Iranian oil to the market would be timely.

At the same time, one should not underestimate the impact that a reacceleration of Chinese demand could have after the early year holidays and the slowdown in industrial activity to lower pollution levels during the Olympic Games. The Chinese authorities continue to loosen constraints on the property market and plan to concentrate public spending in the first part of the year to counter the slowdown in activity resulting from the crisis in the construction sector.