Oil prices fall as Iran nuclear deal looks imminent, Asia growth outlook dims
SINGAPORE: Oil prices dipped on Tuesday as the market awaited a nuclear deal between Iran and six global powers that could see an easing of sanctions against Tehran and a gradual increase in its oil exports, while Asian economies showed new signs of slowing.
Sources present at the talks in Vienna, Austria, said that an announcement was likely in the early hours of Tuesday.
Iran's semi-official Fars news agency reported that a meeting would be held at 0800 GMT on Tuesday between all parties to discuss a possible final deal to curb the country's nuclear work in exchange for lifting sanctions.
Front-month Brent crude futures dropped 61 cents to $57.24 a barrel at 0409 GMT. U.S. crude was trading at $51.48 per barrel, down 72 cents.
"With a nuclear deal imminent, it is clear that Iran is preparing to make up lost ground and re-establish itself as a major supplier," said Sarosh Zaiwalla, a London-based sanctions lawyer.
"Sanctions have crippled Iran's oil production, halving oil exports and severely limiting new development projects. The prospect of them being lifted is creating great excitement ... as foreign trade and investment will allow Iran to make huge efficiencies and drive down the cost of production."
Analysts say it would take Iran many months to fully ramp up its export capacity following any easing of sanctions. But even a modest initial increase would be enough to pull international oil prices down further as the market is already producing around 2.5 million barrels per day above demand.
"We continue to expect further (oil price) drops if Iranian crude flows into the market," Daniel Ang of Singapore-based Phillip Futures said in a report.
Meanwhile, the outlook for some Asian economies dimmed further, potentially eroding oil demand.
China's economic growth is forecast to be the weakest since the 2008/2009 global financial crisis in the second quarter, which together with a stock market rout raises pressure on authorities to do more despite little pay-off so far from a run of stimulus steps.
In Singapore, Asia's main oil trading hub and one of the region's biggest ports, the economy unexpectedly contracted in the second quarter as sluggish global demand knocked the city-state's manufacturing sector.