Oil down but off lows as market awaits Iran nuclear deal

Tue Mar 31, 2015 1:39pm EDT
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By Barani Krishnan

NEW YORK (Reuters) - Oil fell as investors waited on a possible nuclear pact that could release more Iranian crude into an oversupplied market, although prices backed off session lows with no word of a deal as the clock ticked toward the talks' self-imposed deadline on Tuesday.

Six world powers, consisting of the United States, Britain, France, Germany, Russia and China, are negotiating with Iran in Switzerland for an outline deal on Tehran's nuclear program that would be integral to removing sanctions on its oil exports.

Iranian oil exports have been limited to around 1 million barrels per day by the U.S.-led sanctions.

Tehran could raise output by around 500,000 bpd within six months if the restrictions are removed, and by an additional 700,000 bpd within another year, according to estimates by Facts Global Energy.

Oil prices have fallen around 7 percent since Thursday's close on fear Iran would achieve a pact with the world powers, bringing more crude to a market already swollen with supplies.

But with only hours to the midnight deadline for the talks in Lausanne, Switzerland, the White House said U.S. negotiators were willing to continue the discussions into Wednesday if necessary.

France and Germany said earlier they did not want a deal where Iran could not be stopped from developing nuclear weapons.

"I think the negotiators are playing with words, and the market is seeing through that," said Dominick Chirichella, senior partner at the Energy Management Institute in New York.   Continued...

An oil derrick is seen at a fracking site for extracting oil outside of Williston, North Dakota, in this file photo taken March 11, 2013. REUTERS/Shannon Stapleton/Files