World oil prices slid on Monday after a deal was struck between world powers and Iran on the Islamic Republic’s controversial nuclear program.
Brent North Sea crude for delivery in January shed $1.82 to stand at $109.23 a barrel in London midday deals.
New York’s main contract, West Texas Intermediate (WTI) for January, retreated $1.36 to $93.48 a barrel.
“The main focus at the start of the week is the interim (Iran nuclear) deal which was concluded at the weekend,” said Neil MacKinnon, analyst at VTB Capital financial group.
“The immediate impact has been felt on the oil price, which has moved lower, unwinding some of last week’s gains.”
The P5+1 reached a deal with Iran in the early hours of Sunday morning that recognized Iran’s right to nuclear enrichment over level of five percent.
“Brent had rallied last week in response to market talk that the negotiations weren’t going so well, and what we see right now is a downward correction of prices after the deal,” said Victor Shum of IHS Purvin and Gertz consultants.
Tan Chee Tat, an investment analyst at Phillip Futures in Singapore, said WTI was less affected by the deal as any potential influx of Iranian oil into global markets will mainly soften Brent.
“Brent and Iran crude oil are catered to the same regional clients. As such, the news had a greater negative impact on Brent crude instead of WTI crude,” he said.
The deal was reached following marathon talks in Geneva between Iran and the so-called P5+1 nations comprising the United States, China, France, Britain, Russia and Germany.
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