Oil recovers losses as Trump signals possible talks with Iran's Rouhani

Tehran has said no talks will take place unless sanctions are lifted and it is allowed to export oil freely

TOPSHOT - US President Donald Trump reacts during his a bilateral meeting with Egyptian President and Chairman of the African Union Abdel Fattah al-Sissi in Biarritz, south-west France on August 26, 2019, on the third day of the annual G7 Summit. / AFP / Nicholas Kamm
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Oil recovered some of its losses on Tuesday as the White House adopted a more conciliatory tone towards China and also extended an olive branch to Iran to hold talks.

Brent crude was up 61 cents, or 1 per cent, at $59.31 a barrel by 5.05pm UAE time, following a UK bank holiday and as the Group of G7 leaders wrapped up their meeting in Biarritz. France.

US West Texas Intermediate crude futures were up 70 cents, or 1.3 per cent, at $54.34, after a 1 per cent fall on Monday.

The US president Donald Trump appeared amenable to talks with Iranian peer Hassan Rouhani at the end of a gathering of the world's seven richest nations, with host French President Emmanuel Macron saying a meeting could happen "in weeks". Mr Trump also praised China's top negotiator Vice Premier Liu He for urging calm amid escalation in the tit-for-tat tariff war between the two countries.

Mr Macron surprised the US delegation on Sunday by inviting Iranian Foreign Minister Javad Zarif to the summit. Tehran may have asked for its oil exports to be revived to at least 700,000 barrels per day and ideally up to 1.5 million bpd in return for negotiations with the West.

Under the US sanctions, Mr Zarif's travel in New York was restricted when he visited the United Nations in July.

Iranian tanker Grace 1, since renamed Adrian Darya 1, had been in the eye of a storm over the past month after it was apprehended off the coast of Gibraltar by the British Royal Marines for carrying 2 million barrels of crude purportedly destined for Syria.

The US issued a warrant for the arrest of the vessel, which has since sailed from Gibraltar and offloaded its crude to an unknown buyer.

Regarding the possible meeting with Mr Rouhani, Mr Trump said, "I don't know the gentleman, I think Iran wants to get the situation straightened out.

“Their inflation is through the roof, their economy has tanked entirely, the sanctions are absolutely hurting them horribly, I don’t want to see that. They’re great people, but we can’t let them have a nuclear weapon. I think there is a really good chance that we would meet.”

Iran has denied having plans to build a nuclear weapon, saying its atomic programme is only for research and peaceful purposes.

The US last year walked away from the Joint Comprehensive Plan of Action signed by the Barack Obama administration and the four other permanent members of the UN Security Council, plus Germany. The JCPOA's aim was to curb Iran's nuclear enrichment capabilities in return for access to the global financial and oil markets.

Mr Trump, who promised withdrawing from the Iran deal as part of his 2016 presidential campaign, has since reimposed sanctions on Tehran, looking to squeeze its exports to zero by cancelling waivers to nations buying Iranian oil.

In response to Mr Trump, Mr Rouhani said yesterday that no talks could happen until the US lifted the crippling sanctions on its economy and allowed the nation to trade its oil openly in the markets.