Oil prices drop as nuclear deal with Iran looms

Caitlin Morrison
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Oil prices were stuck below $60 yesterday and with an Iranian nuclear deal in the offing could fall further again in the near future.

Talks between Iran and Western powers were due to end last night, and officials said yesterday that a deal aimed at ending sanctions on the Middle Eastern country in return for curbs on the nation’s nuclear programme was imminent.

A White House press officer told reporters yesterday that an interim nuclear agreement with Tehran would be extended if last night’s deadline could not be met.

While sanctions being lifted would not lead to an immediate surge in Iran’s oil output, analysts predicted that such a move could cause crude markets to drop, as it would certainly lead to an uptick in supply.

Meanwhile, the Organisation of Petroleum Exporting Countries (Opec) yesterday revealed that Saudi Arabia produced 10.56m barrels per day (bpd) last month, up 231,000 bpd from May, and a record high for the country.

Iraq and the United Arab Emirates also hit record production numbers.

In its monthly report for June, the organisation said it was forecasting demand for Opec crude in 2016 of 30.1m bpd. This represents a projected increase of 900,000 bpd over the current year and follows an expected rise of 200,000 barrels in 2015.

Opec said this would “imply an improvement towards a more balanced market”.

The group’s expectations were published against a backdrop of slowing oil demand growth – the International Energy Agency (IEA) said in its July report, also out yesterday, that global oil demand growth is forecast to slow to 1.2m bpd in 2016, from an average 1.4m bpd this year.

According to the IEA: “World oil demand growth appears to have peaked in the first quarter at 1.8m bpd and will continue to ease throughout the rest of 2015 and into 2016 as temporary support fades.”