NEW YORK (Reuters) - Oil settled up on Tuesday, reversing early losses, after it became apparent that a nuclear deal between Tehran and six global powers will not immediately remove sanctions placed on Iranian crude exports.
Under the deal, sanctions imposed by the United States, European Union and United Nations are to be lifted in exchange for curbs on Iran’s nuclear programme. But analysts expect the exports restrictions to go away only gradually.
“Oil from Iran will take time to return, and will not be before next year, most likely the second half of 2016,” said Amrita Sen, chief oil analyst at London-based consultancy Energy Aspects.
A Reuters survey forecast that Tehran will be able to raise crude exports by only 60 percent within a year.
Benchmark Brent crude futures LCOc1 settled up 66 cents, or 1.1 percent, at $58.51 a barrel. Prices had fallen almost $2 earlier, weighed by news of the Iran nuclear deal.
U.S. crude futures CLc1 finished up 84 cents, or 1.6 percent, at $53.04 after declining earlier to $50.38.
The dollar’s .DXY slide after unexpectedly weak U.S. retail sales also helped crude’s rebound. [USD/]
While Iran is unlikely to see much benefit from the nuclear deal until it ratifies and verifies its fulfilment, it will get immediate access to around $100 billion in frozen assets and to the international financial system that will allow it to resume some curtailed exports.
Sanctions have almost halved Iranian oil exports, to just over 1 million barrels per day. The global market, meanwhile, is oversupplied by about 2.5 million bpd.
Some say the additional supplies will lead to a new price war in crude. Others doubt the market will fall much.
“OPEC (the Organization of the Petroleum Exporting Countries) will, however manage total volume of oil into the global market,” SEB Markets chief analyst Bjarne Schieldrop said. “There is no reason to drive the oil price substantially below $60 a barrel.”
In the Middle East, Gulf-backed Yemeni forces recaptured Aden’s international airport from Iran-backed Houthi militia fighters after heavy combat, adding to the geopolitical tensions around oil supplies from the region.
Later Tuesday, an industry group will release a report on crude supply-demand for last week. A Reuters poll forecast a 1.2 million-barrel drop in U.S. crude oil supplies for the week to July 10.[EIA/S]
The American Petroleum Institute report is expected at 4:30 p.m. EDT (2030 GMT), before the U.S. government’s inventory data on Wednesday.
Additional reporting by Ron Bousso in London and Hennning Gloysten in Singapore; Editing by Marguerita Choy, Meredith Mazzilli and Lisa Shumaker