The price of oil fell to near $92 a barrel Monday as the possibility of increased crude exports from Iran raised the prospects of an excess of supply on global markets.
By early afternoon in Europe, benchmark U.S. oil for February delivery was down $0.58 to $92.14 a barrel in electronic trading on the New York Mercantile Exchange. On Friday, the contract surged $1.06 to settle at $92.72 a barrel.
Iran and six world powers announced Sunday a plan to implement a six-month interim agreement on the Islamic Republic's nuclear program. Some economic sanctions against Iran will be eased while Tehran has agreed to limit its uranium enrichment and allow international inspectors access to its nuclear facilities.
Iran's oil industry, which has seen its exports severely limited by the sanctions, will benefit from the deal set to take effect Jan. 20, experts said.
"Up to 1 million barrels of Iranian oil per day could become available," said analysts at Commerzbank in Frankfurt in a note to clients. "Unless oil production was cut elsewhere, this would give rise to a considerable oversupply on the oil market, which would weigh on prices."
The Nymex contract fell nearly 5% last week despite a late rally on Friday, when disappointing U.S. jobs data fueled speculation that the Federal Reserve will halt or slow plans to reduce its economic stimulus program.
The stimulus, which has kept interest rates low, has helped underpin oil prices by weakening the dollar and also by attracting investors to commodities in search of higher profits. A weaker dollar usually boosts oil prices by making crude cheaper for traders using other currencies.
Brent crude, used to set prices for international varieties of crude, was down $0.27 at $106.98 a barrel on the ICE Futures exchange in London.
In other energy futures trading on Nymex:
- Wholesale gasoline shed 0.4 cent to $2.6651 a gallon.
- Natural gas jumped 11.9 cents to $4.172 per 1,000 cubic feet.
- Heating oil was down 0.17 cent to $2.939 a gallon.