Benchmark Dubai crude futures' discount to Brent tightened for the prompt month as hopes to spark a G7 summit reconciliation between US and Iran faded quickly after Iran said it would not meet US President Donald Trump unless sanctions on the Persian state were lifted.
"If you lift all the sanctions, bow respectfully to the Iranian nation, well then the conditions will be different," Iranian President Hassan Rouhani said in a televised speech, after Trump said Monday he would be willing to meet "if the circumstances were correct" and might extend a credit line secured by Iran's oil to help Tehran's beleaguered economy.
The stalemate sheds light on tight supply of high sulfur crude oil globally, due to which Dubai-linked crude prices have remained strong in recent months.
At 11 am in Singapore on Wednesday (0300 GMT), the October Brent/Dubai futures spread, or Exchange of Futures for Swaps, narrowed from the $2.68/b assessment at Tuesday's Asian close, to $2.41/b.
The October EFS has averaged $2.68/b to-date in August, Platts data showed. This is tighter than the average EFS over the second-quarter, which averaged $2.81/b.
However, the EFS in Q1 was the tightest this year, averaging 77 cents/b over January to March, when the supply impact of Venezuelan and Iranian sanctions hit hardest.
French President Emmanuel Macron has been leading efforts at the past week's G7 summit to forge a detente between Iran and the US, hosting Iranian foreign minister Javad Zarif on Sunday in a surprise meeting on the sidelines.
Trump's comments had led to some speculation that he and Rouhani could meet at the UN General Assembly in New York next month, potentially paving the way for at least a partial lifting of the sanctions, which were re-imposed on Iran's oil sector after the US unilaterally withdrew from the landmark 2015 nuclear deal last fall.
US officials have previously said they are only open to talks with Iran without preconditions.
