Oil prices fell in Asia today, with the possible return of Iranian crude to the global market stoking further concerns over a supply glut, analysts said.
Iran and major western powers are racing to agree a deal by June 30 that would see Tehran open up its nuclear programme to allay concerns it is seeking atomic weapons, in return for the West lifting punishing economic sanctions.
Any deal could result in Iranian crude returning to the world market, piling up on the current oversupply, which has sent prices plunging from more than $100 a barrel in June last year.
US benchmark West Texas Intermediate crude for August delivery was down 17 cents at $60.21 a barrel in late-morning Asian trade, while Brent crude for August dropped 14 cents to $63.20.
“The key issue is about Iranian crude possibly coming back to the market,” said Daniel Ang, an investment analyst with Phillip Futures in Singapore.
He said market watchers are concerned over how fast Iran can resume exports to the West after a deal is reached.
“If the speed is very fast, this could push the market into further oversupply,” he said.
Historic deal
Iran and the so-called P5+1 powers — Britain, China, France, Germany, Russia and the United States — had agreed in April on the main outlines of what would be a historic deal scaling down Tehran’s nuclear programme.
In return, they agreed that sanctions would be progressively lifted if regular inspections confirm that Tehran is sticking to the accord.
The two sides, having missed a March 31 deadline, agreed in early April a new date of June 30 to finalise the accord and negotiators have been meeting regularly in Vienna and elsewhere since then.
Dealers are also monitoring developments in Europe, where Greece and its creditors are close to a debt reform deal that could avoid the country defaulting and possibly crashing out of the eurozone.
Analysts said the upbeat outlook has pushed the euro up against the dollar, providing support to oil, which is priced in dollars. A weaker US unit makes the commodity cheaper for holders of other currencies, bolstering demand.