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Oil Rally Fizzles on Bolton Firing

By Barani Krishnan

Investing.com - The rally in oil fizzled on Tuesday after news of U.S. National Security Advisor John Bolton’s firing gave rise to speculation that Washington was getting rid of its chief hawk on Iran to make a deal with Tehran.

New York-traded West Texas Intermediate crude, the U.S. benchmark blend, fell 0.5% to $57.57 per barrel by 1:36 PM ET (17:36 GMT) after hitting a six-week high of $58.76 earlier.

London-traded Brent crude, the international benchmark blend, lost 0.35% to $62.37 per barrel. The session high was $63.76.

“The Bolton news is bearish as Bolton is a known hawk on Iran and the markert is assuming that opens the door for talks with Iran, i.e. maybe a lifting of sanctions,” said Phil Flynn, analyst at Price Futures Group in Chicago.

“I think its an overreaction but we will see,” added Flynn, who typically has a bullish outlook on oil.

The United States has imposed sanctions on Iranian oil exports for more than a year to prevent Tehran from supposedly developing nuclear weapons. Bolton has in the past strongly advocated for military action against Iran, though Trump has resisted, saying he still wished for talks or a deal with Tehran.

On Tuesday, the president said in a tweet that he had asked for Bolton’s resignation, adding that he “disagreed strongly with many of (Bolton's) suggestions, as did others in the (a)dministration.”

Iran’s return to the oil market could see up to 1 million barrels per day being added to global supplies, complicating OPEC’s ongoing commitment to cut 1.2 million bpd to balance supplies.

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