Brent slips towards $106, Iran deal eases supply disruption fears
Posted by Shoaib-ur-Rehman Siddiqui
While chances of a potential conflict diminished after Iran halted its most sensitive nuclear operations under a preliminary deal, prospects of the OPEC member pumping more supplies still remain far away.
That kept investors focused on immediate supply worries stemming from unrest in Iraq and Africa.
Brent crude fell 4 cents to $106.31 a barrel by 0340 GMT, after dropping to a low of $105.81 in the previous session.
US oil futures slipped 48 cents to $93.89. Floor trading was shut, and there will be no settlement on the New York Mercantile Exchange due to the Martin Luther King Jr. Day US holiday.
'Short-term supply related issues will continue to prop up oil prices,' said Victor Shum, vice-president of energy consultancy IHS Energy Insight.
'The Iran situation appears to be making progress and that is some of the geopolitical tension off, but lifting oil sanctions will be the last to happen.'
The United States followed through on promised sanctions relief as part of a nuclear agreement that began taking effect on Monday, in exchange for steps that Tehran had taken.
Since Iran had fulfilled its initial nuclear commitments under the deal, the United States will allow the six current customers of Iranian oil to maintain their purchases at current reduced levels for the six-month duration of an interim nuclear deal between Iran and world powers.
A US official said Iran was currently exporting about 60 percent less oil than it was two years ago and would be held to those reduced levels.
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