Traders mull possible breakdown in nuclear talks, strong front-month physical demand in Asia and cautious outlook for China’s macroeconomy
20 May 2025 - 07:27
byLaila Kearney and Trixie Yap
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New York/Singapore — Oil prices barely moved on Tuesday as traders weighed the effect on supply from a possible breakdown in US-Iran talks on Tehran’s nuclear programme, strong front-month physical demand in Asia and a cautious outlook for China’s macroeconomy.
Brent futures dipped 6c to $65.48 a barrel by 3.05am GMT. US West Texas Intermediate (WTI) crude futures gained 1c to $62.7.
Discussions on Iran's nuclear programme would “lead nowhere” if Washington insisted that Tehran slash uranium enrichment activity entirely, state media quoted deputy foreign minister Majid Takhtravanchi as saying on Monday.
The remarks came after US special envoy Steve Witkoff reiterated on Sunday that Washington would require any new deal to include a pact to refrain from enrichment, a precursor to the development of nuclear bombs.
A deal would have paved the way for the easing of US sanctions and allowed Iran to raise oil exports by 300,000 barrels to 400,000 barrels a day, StoneX analyst Alex Hodes said.
Prices were also supported by expectations of near-term firm physical demand, amid healthy refining margins in Asia.
“The Asian buying cycle got off to a very mild start, but strong margins and the end of maintenance should still prove supportive,” said Sparta Commodities analyst Neil Crosby.
Singapore complex refining margins, a regional bellwether, hovered at more than $6 a barrel on average for May, LSEG data showed, up from April’s average of $4.40 a barrel.
However, a US sovereign downgrade by Moody’s dampened the economic outlook for the world’s biggest energy consumer, pinning back oil prices.
The ratings agency cut the US sovereign credit rating by one notch on Friday, citing concern about its growing debt of $36-trillion.
Exerting further pressure on oil prices was data showing decelerating industrial output growth and retail sales in China, the world’s top oil importer, with analysts expecting a slowdown in fuel demand.
In a client note, BMI analysts projected a decline of 0.3% on the year in 2025 consumption, hit by a slowdown across oil product categories.
“Even if China adopts stimulus measures, it may take time to have a positive impact on oil demand,” they added.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil hardly changed amid US-Iran talks
Traders mull possible breakdown in nuclear talks, strong front-month physical demand in Asia and cautious outlook for China’s macroeconomy
New York/Singapore — Oil prices barely moved on Tuesday as traders weighed the effect on supply from a possible breakdown in US-Iran talks on Tehran’s nuclear programme, strong front-month physical demand in Asia and a cautious outlook for China’s macroeconomy.
Brent futures dipped 6c to $65.48 a barrel by 3.05am GMT. US West Texas Intermediate (WTI) crude futures gained 1c to $62.7.
Discussions on Iran's nuclear programme would “lead nowhere” if Washington insisted that Tehran slash uranium enrichment activity entirely, state media quoted deputy foreign minister Majid Takhtravanchi as saying on Monday.
The remarks came after US special envoy Steve Witkoff reiterated on Sunday that Washington would require any new deal to include a pact to refrain from enrichment, a precursor to the development of nuclear bombs.
A deal would have paved the way for the easing of US sanctions and allowed Iran to raise oil exports by 300,000 barrels to 400,000 barrels a day, StoneX analyst Alex Hodes said.
Prices were also supported by expectations of near-term firm physical demand, amid healthy refining margins in Asia.
“The Asian buying cycle got off to a very mild start, but strong margins and the end of maintenance should still prove supportive,” said Sparta Commodities analyst Neil Crosby.
Singapore complex refining margins, a regional bellwether, hovered at more than $6 a barrel on average for May, LSEG data showed, up from April’s average of $4.40 a barrel.
However, a US sovereign downgrade by Moody’s dampened the economic outlook for the world’s biggest energy consumer, pinning back oil prices.
The ratings agency cut the US sovereign credit rating by one notch on Friday, citing concern about its growing debt of $36-trillion.
Exerting further pressure on oil prices was data showing decelerating industrial output growth and retail sales in China, the world’s top oil importer, with analysts expecting a slowdown in fuel demand.
In a client note, BMI analysts projected a decline of 0.3% on the year in 2025 consumption, hit by a slowdown across oil product categories.
“Even if China adopts stimulus measures, it may take time to have a positive impact on oil demand,” they added.
Reuters
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