Oil drops more than 1% on US stockpiles, with US-Iran talks also in focus

By Enes Tunagur

LONDON, Feb 26 (Reuters) - Oil prices fell connected Thursday aft the biggest leap successful U.S. crude inventories successful 3 years, with signs of weakness successful ‌the carnal lipid marketplace besides weighing connected prices, portion traders measure the proviso ‌implications arising from U.S.-Iran talks.

Brent crude futures were down $1.05, oregon 1.5%, astatine $69.80 a tube by 1235 GMT. WTI futures ​lost $1.26, oregon 1.9%, to $64.16.

U.S. crude inventories roseate by 16 cardinal barrels past week, Energy Information Administration information showed connected Wednesday. [EIA/S]

Weakness successful the North Sea carnal lipid marketplace is besides weighing connected lipid prices, said UBS expert Giovanni Staunovo, adding that markets would absorption connected the result of Thursday's 3rd ‌round of U.S.-Iran talks.

The North Sea ⁠physical marketplace underpins the Brent futures contract, prices of which person precocious by astir 15% truthful acold this twelvemonth arsenic imaginable subject struggle betwixt ⁠the U.S. and Iran has outweighed expectations of oversupply.

U.S. envoy Steve Witkoff and Jared Kushner are owed to conscionable an Iranian delegation successful Geneva connected Thursday.

Also connected the proviso side, Saudi Arabia is ​boosting lipid ​production and exports successful a contingency program should ​any U.S. onslaught connected Iran disrupt ‌supplies from the Middle East, 2 sources acquainted with the program said connected Wednesday.

OPEC+, which groups members of the Organization of the Petroleum Exporting Countries and allies including Russia, is apt to see raising lipid output by 137,000 barrels per time successful April, 3 sources with cognition of OPEC+ reasoning said arsenic the radical prepares for highest summertime request portion prices stay strong.

Brent ‌rose connected Monday to its highest since July 31 ​as Washington positioned subject forces successful the Middle East ​to property Iran to negociate an extremity ​to its atomic and ballistic rocket programme.

An extended struggle could disrupt supplies ‌from Iran, OPEC's third-biggest crude producer, and ​other Middle East exporters.

"The ​outcome of U.S.-Iran atomic talks contiguous volition beryllium cardinal to the absorption of lipid prices," ING analysts said successful a note.

"A constructive solution would apt punctual the marketplace ​to gradually unwind arsenic overmuch arsenic ‌a $10 per tube hazard premium, which we judge is presently priced in."

(Reporting by ​Enes Tunagur successful LondonAdditional reporting by Yuka Obayashi successful Tokyo and Emily Chow ​in SingaporeEditing by Emelia Sithole-Matarise and David Goodman)