Find us @

Feature

Oil prices are plummeting as the deal with Iran appears imminent

Ambar Warrick Investment profited from oil prices falling after reports that Iran and countries capable of exporting oil were planning on any deal.

Published

on

Through Ambar Warrick

Investing.com— On Monday, oil prices dropped significantly as a result of news that a deal between Iran and the West to relax sanctions on its supply of crude oil was imminent.

U.S. crude benchmark West Texas Intermediate futures slid almost 1% to $89.39 per barrel by 20:01 ET, while London-traded Brent oil futures dropped 0.5% to $95.59 per barrel (0002 GMT).

Al Jazeera, a Qatari news outlet, claimed over the weekend that an agreement on Iran’s nuclear program was “imminent,” and other reports claimed that Tehran was prepared to give up its demand that the Islamic Revolutionary Guard Corps be taken off the State Department’s list of foreign terrorist groups.

The European Union helped facilitate negotiations with the U.S., but a significant sticking point in the accord was Iran’s demand for the corps.

According to Al Jazeera, sanctions against 17 Iranian banks and 150 economic institutions will be lifted after the signing of the agreement. In four months after the agreement is signed, Tehran will also be allowed to export 50 million barrels of oil per day.

The measure is anticipated to immediately unleash over 1 million barrels per day of supplies onto the market, which foretells a decline in oil prices.

However, the Organization of Petroleum Exporting Countries may decide to take action to reduce output in response to this increase in supply. Oil prices increased late last week due to supply-side speculation, but they still finished the week in the red.

Oil prices recently fell to their lowest levels in six months as a result of worries about the slowing global economy and speculators’ fears of a recession-related demand crisis. Particularly concerning for the oil markets have been indications of economic stress in China, a significant importer. Due to Beijing’s rigorous zero-COVID policy, the Chinese economy has had a difficult time coping with this year’s string of COVID lockdowns.

However, statistics on U.S. crude inventories released last week suggested that the world’s largest economy’s consumption was rebounding from a slump. However, the Federal Reserve’s ongoing tightening of monetary policy may prevent such a comeback.