By Barani Krishnan

Oil fell for the first time in three weeks despite recovering from two-day selling. But Russia’s holdout over the Iranian nuclear deal — and the U.S. sanctions waiver that would follow, bringing Tehran crude to an undersupplied market — kept prices way above Friday’s lows.

The global oil benchmark,, rose $2.52 or 2.3% to $111.85 per barrel. This was sharply more than the $107.22 session low. After a 15% slide over the previous two days, Brent recovered. Brent suffered a loss of 6% for the week.

U.S. crude’s , or WTI, benchmark rose $2.95, or 2.8%, at $108.97 a barrel, way above Friday’s low of $104.52. WTI has fallen 14% during the previous two sessions. However, crude U.S. benchmark dropped 6% during the week.

Both Brent and WTI hit 14-year highs above $130 a barrel last week after a barrage of Western sanctions — that were still piling up this week — against Russia for its invasion of Ukraine. The spike in oil came as the traders bet — correctly — that Russian energy exports would also be hit by the sanctions, despite European governments taking pains to decouple them from the broader measures aimed at Russia’s economy and businesses.

However, oil prices dropped this week due to hints of higher production from major oil exporting nations like Iraq and United Arab Emirates. (This deal was later retracted). 

Fears of demand destruction for oil priced at $100 barrel and above — twice more than a year ago — also weighed on the market.

A suggestion by Russian President Vladimir Putin on Friday that peace talks with Ukraine could be showing “certain positive shifts” further eased some of the geopolitical heat in oil, pushing crude to the day’s lows.

But Russia’s last-minute hold-out over the Iran nuclear deal pushed oil back higher.

The Russian maneuver came after its Foreign Minister Sergei Lavrov demanded that in order for the Iran deal to proceed, his country’s trade with Iran should not be affected by sanctions imposed on Moscow over Ukraine – a demand Western powers say is unacceptable and Washington has insisted it will not agree to.

Josep Borrell, European Union’s chief of foreign policy wrote later on Twitter that “a pause in #ViennaTalks was necessary, due to external factors.” “A final text has been essentially prepared and is on the table.”

Iran and Russia have been allies for years and Tehran had leaned on Moscow — aside from its other major backer China — to get its oil exports out during the past four years of U.S. sanctions.

Tehran said Thursday that new obstacles were being thrown in the way of reviving this deal. Washington reiterated its insistence that Washington would not accommodate Russia’s demands. Russia has repeatedly stated they have no connection to Iran talks.

Officials stated that they hoped the talks will resume in the coming days.

“Energy traders went into this week thinking Iran had a small chance there for a breakthrough with nuclear deal talks and now those negotiations have been paused,” said Ed Moya, analyst at online trading platform OANDA. 

“Oil prices are still looking heavy as crude demand destruction appears like it could get much worse as inflationary pressures intensify the longer the war in Ukraine lasts. The supply side for oil will keep this market tight for a while.”