Oil tumbles as Iran nuclear deal looms

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oil prices fallingOil prices tumbled on Monday as Iran and six world powers closed in on a nuclear deal that would end sanctions on the Islamic Republic and let more Iranian oil on to world markets.

News of a unanimous agreement by European leaders on a bailout loan for Athens, which should allow Greece to stay in the euro zone, helped pare early losses.

Brent crude for August fell $1.89 to a low of $56.84 a barrel before rallying back to around $57.30 by 4.40 a.m. EDT.

U.S. light crude, also known as West Texas Intermediate (WTI), was down $1.15 at $51.59 a barrel.

Iran and six world powers are reportedly on the brink of finding a nuclear deal that would bring sanctions relief in exchange for curbs on Tehran’s nuclear program.

A senior Iranian negotiator said a nuclear deal would be completed but cautioned that there was work to be done and he could not promise the talks would finish on Monday or Tuesday.

“I cannot promise whether the remaining issues can be resolved tonight or tomorrow night,” Iran’s Tasnim news agency quoted Deputy Foreign Minister Abbas Araqchi as saying.

The chance of Iran adding to a global oil surplus at a time of weak demand led some analysts to forecast more oil falls.

Bank of America Merrill Lynch said U.S. crude prices “could soon drop well below our $50 per barrel target” in the third quarter of 2015.

Commerzbank said a fall below $55 per barrel in Brent and below $50 per barrel in U.S. crude was “conceivable”.

Oil prices pared early sharp losses after European Council President Donald Tusk said euro zone leaders had “unanimously reached agreement” on a deal for Greece.

Prime Minister Alexis Tsipras confirmed Greece had secured debt restructuring and medium-term financing in a growth package worth 35 billion euros ($38.7 billion) in a deal with its creditors.

But the oil market remained bearish.

“Implementation risks remain, and a possible nuclear deal with Iran should limit the upside,” said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt.

Although analysts say it would take until 2016 before Iran would be able to return to full-scale exports, most estimate that a jump of around 200,000 barrels per day in exports could be seen in the short term, adding to a current surplus of about 2.6 million barrels a day.

With oversupply ongoing and abundant economic risk, several banks have lowered their oil price forecasts.

 

REUTERS

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6 responses to “Oil tumbles as Iran nuclear deal looms”

  1. $1.15 is not a “tumble”!!
    Stupid headline.

    1. percentage wise it is, if you follow markets. 2% is a big deal. billions made and lost on markets.

      1. 5thDrawer Avatar
        5thDrawer

        I think she meant it was a crash, not ‘just’ a tumble … probably had stock in oil. :-)))

      2. 2% is nothing compared to over 50% it already lost. Everything is relative. It has lost 2% many a time but it wasn’t called a tumble.

        1. 5thDrawer Avatar
          5thDrawer

          And 2% becomes a lower actual dollar amount each time it drops … but ‘The Market’ LOVES scare stories to keep it busy. As Barry says, the ‘top boys’ make or break on a penny sometimes. 1 cent on a billion would keep me in Scotch for a while.
          And you in Kotex.. 😉

  2. 5thDrawer Avatar
    5thDrawer

    And Electric-motor Planes fly across the channel. Viva La France .. ;-))) AGAIN.

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