Oil prices dip almost 2% as final Iran deal nearing

Reuters / Raheb Homavandi
The oil price slid early on Monday ahead of a deal on Iran’s nuclear program as foreign ministers of Iran and six world powers hold a coordination meeting on Monday. Tehran has 30 million barrels of crude in storage to add to the global oil glut.

Brent futures for August fell 88 cents, or 1.50 percent, trading at $57.85 a barrel at 13:41 MSK. US light crude West Texas Intermediate (WTI) was down 64 cents, or 1.21 percent, at $52.10 a barrel. However, by the time of publication the slump had eased, with Brent trading at $58.47 a barrel and WTI standing at $52.65 a barrel.

The final round of talks between Tehran and P5+1 group (the US, Britain, France, China, Russia and Germany) is currently underway in Vienna.

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Iranian Foreign Minister Javad Zarif at a meeting with Chinese counterpart Wang Yi on Monday said he hoped the talks between Iran and the P5+1 group of international mediators” will not be extended anymore,” a representative of the Iranian delegation told TASS.

READ MORE: Iran, world powers edge towards nuclear deal, but major issues remain

Several issues remain unresolved; Iranian Deputy Foreign Minister Abbas Aragchi told Iranian media.

"The talks are now at the key stage, but problems still remain," Aragchi said.

"I hope we are finally entering the final phase of these marathon negotiations. I believe it," said French Foreign Minister Laurent Fabius, who cancelled a trip to Africa to stay at the talks in Vienna.

Iran’s 20-30 million barrels of crude in storage are estimated to be some of the largest reserves in the world, and if a deal is signed, that could further push down the price of oil.

Some analysts say it would take until 2016 before Iran could return to full-scale exports. However, they estimate an increase of around 200,000 barrels per day in exports in the short-term, adding to a current surplus of about 2.6 million barrels a day.

Iranian oil exports have more than halved to about 1 million barrels per day (bpd) since 2012 as a result of EU and US sanctions over the country’s nuclear program.

A final comprehensive agreement on the Iran was originally expected to be reached by June 30 but the negotiating process has been extended until July 7.

On March 31, Iran and six major world powers have managed to reach a preliminary agreement on ‘all the key aspects’ of a deal.

A final deal is to insure that Iran would not try to produce a nuclear weapon in exchange for the lifting of international sanctions. Tehran insists that it’s not pursuing a nuclear capability, but some nations have accused it of having a military nuclear program.