Oil prices climbed after falling for four straight sessions, after the deadline for the final agreement between Iran and the world powers over the country’s nuclear program curtailment was extended by a week.
Light sweet crude for August delivery most recently tacked up $1.24 or 2.13% to trade at $59.64 a barrel on the New York Mercantile Exchange.
Brent futures, the global benchmark, jumped $1.73 or 2.77% to trade at $63.74 a barrel on the London based ICE Futures Exchange.
“It may not be until 2016 before Iran can meet its side of any comprehensive agreement with the Western powers, so a surge in (oil) supply would not be imminent,” Capital Economics analysts told Reuters in a research note.
The negotiations, aimed at limiting the Islamic country’s nuclear program by blocking the path to nuclear weapons and lifting economic sanctions against the country, were widely expected to be concluded Tuesday.
Many traders expect the final pact, if agreed to eventually allow Iran to increase its crude exports by hundreds of thousand a day. An agreement would be bearish crude prices as it would worsen the already bad oil glut in the world.
The economic sanctions issued against the country by the world powers trimmed Iran’s crude exports from more than 2.6 million barrels a day in 2011 to just about 1.4 million barrels a day currently according to the government backed US Energy Information Administration.
Analysts, however, expect the situation in Greece to continue to weigh down prices. A Greek default would weaken European economic growth and strengthen the dollar against other currencies.
A stronger dollar is bearish for the price of commodities denominated in dollars like oil as it would make it more expensive to holders of other currencies.
“With both Greece and Iran threatening the value of crude oil, retail savings could continue through the end of summer as barrel prices slump closer to $55 a barrel,” Mansfield Oil Co. told the Wall Street Journal in a note.
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