Oil Steady as Iran Tensions Ease, OPEC Sticks to Target


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Oil and product futures edged higher Tuesday (2/3) morning, 
after dropping more than 4% in the previous session as a portion of the 
geopolitical risk premium tied to U.S.-Iran tensions faded after both sides 
announced talks.

   OPEC on Monday, meanwhile, revealed that Iraq, Kazakhstan, Oman and the UAE 
agreed to lower voluntary production cuts to compensate for past overproduction 
in the months ahead. On Sunday, eight OPEC+ countries reaffirmed plans to 
extend the pause in production hikes to March.

   The OPEC commitment, along with U.S. President Donald Trump's announcement 
of a trade deal with India, supported oil prices.

   NYMEX traded WTI futures for March delivery rose $0.41 to $62.55 bbl, and 
ICE Brent for April delivery advanced $0.31 to $66.61 bbl.

   Downstream, front-month ULSD futures added $0.0334 to trade near $2.3932 
gallon, and RBOB for March delivery gained $0.0193 to $1.8707 gallon.

   The U.S. dollar index remained little changed, softening by 0.102 points to 
97.545 against a basket of foreign currencies.

   U.S. and Iranian diplomats are to resume in Turkey on Friday nuclear talks 
last held in June. Some of the military escalation risk remained priced-in, as 
U.S. President Donald Trump on Monday reiterated his willingness to strike Iran 
should negotiations fail and U.S. warships remained in the region.

   Trump also announced on Monday that the U.S. tariffs on Indian imports would 
drop to 18% from a prior 25%, following his phone call with Prime Minister 
Narendra Modi of India. The U.S. president said an additional 25% tariff 
imposed on India for its purchases of Russian oil would also be revoked, with 
New Delhi's agreement to buy U.S.-owned or marketed oil.

   Modi separately confirmed the new tariff rate of 18% but did not comment on 
the future of Indian oil purchases from Russia. The U.S.-India deal 
announcement came less than a week after the European Union announced a free 
trade agreement with India, which aims to double EU goods exports to the 
fastest growing large economy by 2032 and reduces tariffs by more than 96%.

   OPEC's commitment to stick to its production targets reinforced its desire 
for a balanced crude market, supported by OECD inventories that trail long term 
averages.

   On the U.S. inventory front, the American Petroleum Institute is set to 
release its weekly U.S. inventory estimate later on Tuesday, followed by 
official data from the Energy Information Administration Wednesday.




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