Iran deal sends oil lower, lifts shares and dollar

Mon Nov 25, 2013 7:45am EST
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By Richard Hubbard

LONDON (Reuters) - The historic deal to curb Iran's nuclear program prompted a dip in oil prices on Monday and buoyed world shares as investors priced in an easing in political tensions and the lift it may give to global economic growth.

Negotiated by six world powers and Iran over the weekend, the deal halts Iran's most sensitive nuclear activities and gives it some relief from crippling sanctions, but does not allow the OPEC member to increase oil sales for six months.

Despite tough work ahead to transform the agreement into a permanent solution, it was enough to ease oil supply fears and send Brent crude down $2.15 at $108.90 in European trade after it had earlier slid $3 to hit a low of $108.05. <O/R>

"What prices are mostly reflecting is a lack of geopolitical risk premium," said Barclays oil analyst Miswin Mahesh.

"We would have expected a $3 to $4 a barrel move. We did not get that because... you're not seeing additional barrels coming into the market," he said.

The easing of Middle East tensions after the agreement did look set to lift Wall St shares when trading opens, where the S&P 500 and Dow indexes .SPX.DJI are sitting at record highs after posting a seventh straight week of gains on Friday. .N

"It's positive news, its clearly boosting equity markets today and in a broader sense its reflationary for the global economy," said Mike Ingram, market commentator at BGC Partners.

European shares rose by 0.5 percent .FTEU3 in the wake of the agreement, extending last week's solid gains and edging closer to their five-year high highs. Germany's DAX .GDAXI rose 0.9 percent to a record high. .EU   Continued...

A visitor walks past logos at the Tokyo Stock Exchange in Tokyo June 13, 2013. REUTERS/Toru Hanai