Oil prices slid on news that a preliminary accord to constrain development over Iran’s nuclear program was reached.
West Texas Intermediate crude, the US benchmark, for May delivery slipped 95 cents or 1.2% to $49.27 a barrel on the New York Mercantile Exchange. The contract had slipped by more than $2 in morning trading but was helped up by a weaker dollar.
WTI crude, the country’s most actively traded contract, had gained $2.49 to $50.09 on Wednesday- its biggest gain in over two months.
North Sea Brent, the global benchmark for May delivery declined by $2.15 or 3.8% to $54.95 a barrel-almost $1 above the contract’s session low.
Under the tentative deal, the gulf country would shut down at least two thirds of its centrifuges producing bomb-building Uranium, destroy a reactor that could produce plutonium and allow intrusive verification and checks.
Economic sanctions had limited the country’s oil exports to around 1.1 million bar ells per day down from 2.5 million in 2002.
According to traders, the country is keeping up to 30 million barrels of oil ready in tankers for immediate exports after the sanctions are lifted.
“Iran-owned tankers have nothing better to do anyway, given that they are themselves strangled by U.S. sanctions,” Ralph Leszczynski, research director at Italian ship broker Banchero Costa, told the Wall Street Journal.
“Many of these are being used to store crude instead.”
Iranian oil exports are likely to cause global crude prices to go off a cliff with the prices already languishing under the commodity’s ongoing glut. The oil selloff has seen prices slump from 2014 highs of $115 a barrel for Brent and $ 107 a barrel for WTI.
“Come June, the market will again be rocked by expectations of higher Iranian supply. If the Saudis stifle another production cut, that could be the final nail in OPEC’s coffin as some of its members break away to do their own thing to support the market.” Dominick Chirichella, senior partner at the Energy Management Institute in New York, told Reuters.
To contact the reporter of the story: Jonathan Millet at email@example.com