SINGAPORE–Oil prices edged higher in Asia Monday but gains were capped as dealers focused on crunch Greek debt talks as well as a possible return of Iranian supplies disrupted by international sanctions, analysts said.
U.S. benchmark West Texas Intermediate for July delivery gained five U.S. cents to US$59.66 while Brent crude for August gained three cents to US$63.05 in afternoon trade.
Sanjeev Gupta, head of the Asia-Pacific oil and gas practice at business consultancy firm EY, said crude prices were facing downward pressure ��due to concerns over the Greek financial crisis��.
The heads of the 19 eurozone countries will hold an emergency summit in Brussels later Monday under pressure to prevent Greece from defaulting on its debt. If the two sides are unable to agree a deal, Greece will likely default on an IMF debt payment of around 1.5 billion euros due on June 30, leading to the possibility of it crashing out of the eurozone. Greek Prime Minister Alexis Tsipras on Sunday presented new proposals on reforming the country’s bailout to European leaders, raising hopes that a default can be averted after a five-month deadlock. Daniel Ang, investment analyst at Phillip Futures in Singapore, said negotiations between crude producer Iran and world powers over Tehran’s controversial nuclear programme are ��going to give headwind for crude prices this week��. Six global powers �X the United Kingdom, China, France, Germany, Russia and the United States �X are trying to nail down a deal to curb Iran’s nuclear ambitions by reducing its stockpiles of enriched uranium and mothballing some of its sites. If the agreement is reached by June 30 and implemented subsequently, the powers have agreed to gradually scale back sanctions imposed since 2012, including on its petroleum industry.
Iran has the world’s fourth-largest oil reserves but its exports have fallen from more than 2.2 million barrels per day in 2011 to about 1.3 million because of the sanctions. A return of disrupted Iranian supplies ��could cause another round of oversupply�� in a global market already flush with stockpiles, Ang said.