Crude oil futures inched lower in mid-morning trade in Asia Oct. 26 amid reports of talks this week between Iran and the EU, opening the possibility of an eventual return of Iranian oil to global oil markets.
Tehran's top nuclear negotiator Ali Bagheri Kani said in a tweet late Oct. 25 that he will be meeting with his EU counterpart Enrique Mora in Brussels on Oct. 27 to revive the country's stalled 2015 nuclear talks.
This follows an initial round of discussions between the EU and Iran held in Tehran on Oct. 14.
A deal will potentially bring back at least 1.3 million barrels of Iranian oil, according to some analyst estimates, helping to ease a severe shortage of oil at a time when the world needs it going into winter season.
"Prices gave up gains following reports that the EU will hold discussions with Iran later this week," said ANZ Research analysts in a note.
Nonetheless, analysts at ING said markets will likely take a cautious approach toward the talks.
"There is plenty of uncertainty around the timing and how talks will evolve. The market will likely take a more cautious approach in terms of pricing in the potential for a deal, given how talks broke down over the summer," ING's Warren Patterson and Wenyu Yao said.
"We are forecasting in our balance sheet that Iranian oil output will end 2022 around 1.3 million b/d higher than where it starts the year, but clearly this assumes a lifting of sanctions," they said.