Oil declines in reaction to Iran’s nuclear plan

Oil fell on Tuesday after Iran said its proposal for easing the standoff over its nuclear programme spurred a “good” reaction from world powers, although the prospect of a US debt deal in Washington lent some support to prices.

By (Reuters)

Published: Wed 16 Oct 2013, 10:56 AM

Last updated: Sat 4 Apr 2015, 10:57 AM

Iran’s deputy foreign minister said the atmosphere at a two-day meeting with the six powers in Geneva was “positive” and that the details of Tehran’s proposal would be discussed later in the afternoon. Brent crude was trading 86 cents lower at $110.18 a barrel at 1059 GMT, after settling down in the two previous sessions.

US oil was down 69 cents at $101.72 a barrel, after closing 39 cents higher.

“We think it would be wrong to dismiss any of this as more of the same-old, same-old,” Credit Suisse said in a research note. “That said, we don’t anticipate any sudden and meaningful increase in Iran’s oil exports in the next few months, or even quarters.”

On Monday, the US held out the prospect of quick relief from sanctions for Iran if Tehran moved swiftly to allay concerns about its programme. The talks that started on Tuesday on Iran’s nuclear development are the first since the election of President Hassan Rouhani, who has tried to improve ties with the West to pave the way for an end to sanctions that have cut Iranian oil exports by more than 1 million barrels per day.

Oil prices could fall around $10 per barrel if Iran resumes full exports, analysts say. Adding some support to oil, a month-long battle over US government spending may be edging closer to a compromise.

that would reopen federal agencies and push back the possibility of a default for several months. Hurdles remained, however, as a Thursday deadline drew near.

Elsewhere, Britain’s Grangemouth refinery began halting work on Monday ahead of a 48-hour strike. In 2008 a strike there interrupted flows of crude through the Forties Pipeline System and shut in production at 70 North Sea fields, pushing up Brent prices.

Investors will do without oil inventory data from the US government this week for the first time since 1979, as the Energy Information Administration refrains from publishing its weekly report due to a lack of funds.

US commercial crude oil inventories were forecast to have increased by 2.3 million barrels in the week to Oct. 11, a Reuters poll of analysts showed on Monday. The American Petroleum Institute, an industry group, will release its weekly inventory report on Wednesday.