The Islamic Republic of Iran – long under suspicion, and sanctions, due to its questionable nuclear program – agreed to slow down its nuclear effort later this month. As a consequence, some restrictions implemented by European nations and the U.S. are likely to be relaxed.
The nation is the fifth-largest generator of members of the Organization of the Petroleum Exporting Countries.
"The Iranian agreement is the main factor today," director of the futures division Bob Yawger with Mizuho Securities USA Inc. in New York told the news source on Monday. "Negotiations for a longer-term deal that would return Iranian barrels to market will now proceed. The Iranian oil would come to an already well-supplied market, raising problems for producers."
At 10:28 a.m. on Monday, WTI crude oil futures fell 0.75 percent, a 70-cent loss to $92.02 per barrel. At 10:27 a.m., Brent crude oil futures edged down 0.17 percent, an 18-cent loss to $107.07 per barrel.
But the pact is a first step of a process that could deliver a final agreement in as few as six months or as many as 12 months. The country has insisted its drive is toward peaceful purposes but those contentions raise the eyebrows of the U.S. and its allies.
Iran generated 2.68 million barrels of crude oil per day last month, according to data provided by the news source. It trails the United Arab Emirates, Kuwait, Iraq and Saudi Arabia for production.
One researcher presented a caveat, that something might go wrong during the tenure of that period.
"There's a lot that can go wrong during the next six months to derail a final deal," director of market research Addison Armstrong with Tradition Energy in Stamford, Connecticut told the news source on Monday. "There's certainly a lot of opposition to any agreement in Congress and Israel. This is clearly not going to be adding barrels to the market in the near term."
Six major powers and Iran
Reuters reports the pact involves the Middle Eastern nation and six counterpart countries. The agreement was announced by the Foreign Ministry of Iran and the European Union.
Negotiators with those powers and Iran are likely to continue conducting discussions next month once the deal kicks in on January 20, an unnamed diplomatic source told the news source on Monday.
"There's confirmation of joint action so now they will be able to start working on a final agreement and in around six months we could have sanctions lifted or at least further easing," analyst Olivier Jakob with Petromatrix in Zug, Switzerland told the news source on Monday.
Additional losses likely
CNBC reports the price of crude oil is likely to continue its downward dip as a result of the pact between Iran and its counterparts.
During the sanctions, the export of oil from Iran fell by well more than 50 percent because western nations could not deal with the nation. What previously checked in at roughly 2.5 million barrels per day fell to roughly 1 million barrels per day.
If negotiators are able to hash out a permanent pact, the price of the energy commodity could continue to endure losses in the near term.
"For the oil market, this could potentially allow visibility to Iranian exports [and their] return to the market – that's about a million barrels per day or so that's currently shut off," head of analysis Neil Atkinson with specialist business information service at Lloyd's List Intelligence told CNBC on Monday.
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