Iran Nuclear Deal Prompts Quick Dip in Oil

by Christopher Freeburn | November 25, 2013 9:06 am

oil barrel Iran Nuclear Deal Prompts Quick Dip in Oil[1]News of a multi-party deal over Iran’s nuclear program[2] 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[3].

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