Oil, ruble drop as Iran nuclear deal reached

Oil prices continued to slide Tuesday with the Russian ruble as Iran and six world powers reached a conclusive deal on Iran’s nuclear program. The deal comes into force in 90 days after UN Security Council ratification.

Brent futures for August fell 2.18 percent, trading at $56.63 a barrel at 12:23 MSK. US light crude West Texas Intermediate (WTI) was down 2.11 percent, at $51.06 a barrel.

READ MORE: Oil prices dip almost 2% as final Iran deal nearing

The ruble retreated to 57.01 per dollar and 62.8 per euro Tuesday on the Moscow Exchange.

However, the Central Bank of Russia (CBR) said that the effect on the ruble will be limited as most of the market players have already included the Iran factor in their forecasts.

“As for the Iran nuclear deal, most of the market players and international experts took into account the scenario of signing the deal in their forecasts for this year,” the CBR said Tuesday.

Foreign ministers of the seven negotiating nations have met at the UN center in Vienna at about 09:00 GMT, followed by a news conference.

The UN-imposed arms embargo against Iran is to remain in force for five years, while the restrictions on rocket technology exchange is to be kept for eight years, according to Reuters.

The economic sanctions that are to be lifted could be restored within 65 days if Iran doesn't comply with the terms of the deal. The deal will also mean the EU will lift sanctions on part of the SWIFT global payment system, banking operations and insurance, a draft document said.

READ MORE: Iranian diplomat says Iran, 6 major powers have reached nuclear deal

Iran has about 30 million barrels of crude in storage, which is estimated to be some of the largest reserves in the world.

However, some analysts say Iran will return to full-scale exports no sooner than 2016.

"The Iranian deal is unlikely to bring back large volumes of oil yet, given the removal of upstream sanctions is complex and significant investment is needed for raising output," Energy Aspects told Reuters.

“Iran’s energy sector has been battered by years of sanctions, and they may not be in a position to re-start what has been closed,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas in London, said by e-mail to Bloomberg. “We remain skeptical that Iran can quickly restore 600,000 to 800,000 barrels of additional production within a couple of months.”

In the short-term around 200,000 barrels of crude per day is expected in exports from Tehran, which will add to a current surplus of about 2.6 million barrels a day.