Oil Prices Fall amid Iran Nuclear Deal Supply Boost

A maze of crude oil pipes and valves is pictured during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas on June 9, 2016. (Richard Carson/Reuters)

LONDON–Oil dropped over $1 a barrel on Tuesday, approaching a multi-month low hit last week, pressured by the latest progress in talks to revive the 2015 Iran nuclear accord, which would eventually allow Tehran to boost exports in a tight market.

The European Union presented Monday a “final text” to revive the agreement.

Brent crude oil 1fell $1. 34, or 1.4 percent, to $95. 31 a barrel at 0815 GMT. U.S. West Texas Intermediate (WTI) crude dropped $1. 25, or 1.4 percent, to $89.51.

” I’m not certain traders are very hopeful given how long it took to get here and the reportedly still being points of contention,” stated Craig Erlam, brokerage OANDA.

Talks dragged on for several months with no agreement. According to Iranian tanker trackers crude oil exports are still at least one million barrels per daily below the rate of 2018 in which President Donald Trump left the nuclear deal. So an agreement may allow for a significant increase in supply.

Oil soared earlier in the year as Ukraine’s war added to supply concerns, with Brent hitting $139 in March, close to its all-time high, in March. Since then, concerns about an economic slowdown were weighed.

Brent fell as low as $92. 78 on Friday, its lowest since February, as the Bank of England’s warning on Thursday of a drawn-out downturn intensified fears of slowing fuel use.

Another bearish sign was that China’s crude oil imports fell 9.5% in July compared to a year ago, according to customs data. China is the largest crude oil importer in the world.

The latest U.S. weekly oil supply report is now available. It was first published by the American Petroleum Institute at 2030 GMT. Analysts expect a small 400,000-barrel drop in crude inventories.

By Alex Lawler