News of a multi-party deal over Iran’s nuclear program sent oil futures lower in Monday morning trading.
The agreement, which will relax international sanctions on the Islamic nation for about six months while talks continue on a broader plan to constrain Iranian nuclear ambitions, sent crude futures tumbling as much as $3 to about $108 a barrel. However, commodities analysts cautioned that the fall could prove temporary and that additional proof of progress on an ultimate agreement between Iran and Western powers would be needed before a sustained decline in oil prices was likely, Bloomberg noted.
Announced in Geneva on Sunday, the six-month deal between Iran and six powers, including the United States and France, would permit Iran to export roughly one million barrels of oil a day, bringing much-needed cash into the Islamic republic’s struggling economy. Under the deal, Iran will see about $7 billion in eased international sanctions.
Sanctions have deprive Iran of about $80 billion in oil revenue in recent years, cutting its oil sales by 60% since 2012.
In exchange, Iran has agreed to delay work on its nuclear program. The Iranian government has insisted that the program is meant to develop a peaceful nuclear power industry, while the U.S. and other international powers have accused Iran of working toward the building of nuclear weapons.