Brent crude fell by as much as $3 a barrel on Monday (November 25) before paring losses, as a breakthrough nuclear deal between world powers and Iran over the weekend led to expectations for an increase in supply.
Director of Trading and Capital Spreads at London Capital Group, Nick Lewis, said: ''Oil was as much as three dollars lower, back below $1.10, down to about $108.5 on the Brent prize. The European leisure centre has been boosted on the back of it, the airline stocks were a little bit better, Air France, Easyjet, British Airways have all done well, but I think the companies that seem to have come out of this best and the ones most looking forward to it are some of the French car manufacturers who did have a bit of a space in this market before the sanctions were put in place.Peugeot I think is up three percent, was up in fact slightly more than that, [but] is up three percent now and Renault is up 1.2 percent.''
Brent was down $1.75 at $109.30 by 1415 GMT, after dropping to as low as $108.05 earlier in the session. U.S. oil fell $1.25 to $93.59. Tough sanctions against Iran in the past two years have slashed exports from the OPEC member by more than half, keeping Brent above $100 a barrel despite weak global demand.
The deal halts Iran's most sensitive nuclear activity and suspends some sanctions by the United States and the European Union on several sectors of Iran's economy for an initial six-month period.
Barclay's oil analyst, Miswin Mahesh, said: ''It's not a free passport to continue business as usual for Iran but it does help the oil market because otherwise, going into next year, we still have massive outages, Libya is off the market by 1.4 million barrels per day, Iraq is off the market by 300,000 barrels per day and on top of that Iran is also reducing.''
The head of the International Atomic Energy Agency said, however, it would be difficult for Iran to revive its oil output to former levels quickly even if international restrictions on its exports were lifted.
Presented by Adam Justice