Iran Deal May Not Mean Increased Oil Supply Just Yet
Brent crude oil traded steadily at $110.81 on Tuesday morning is investors evaluated whether or not the weekend's deal between world powers and Iranian officials would translate into increased global supply.
Western leaders struck a deal with Iran over the weekend in the first step forward in a decade long standoff over the nation's nuclear development program. The deal means Iran will curb its nuclear program in exchange for looser sanctions. The deal pushed Brent prices lower, but the commodity recovered after investors re-evaluated how soon Iranian oil will hit the markets.
Sanctions on Iranian oil have kept much of Iran's oil from the market and kept Brent prices above $100. The possibility of that oil flooding an already well supplied market drove the commodity's prices downward. However, according to CNBC most analysts don't see the sanctions keeping Iranian oil at bay being lifted any time soon.
Rising tension in OPEC supplier Libya helped mitigate some of Brent's losses due to the Iran deal as investors worried about fresh supply interruptions due to the country's instability. The North African nation has seen its oil exports more than halved this year as labor protests shut down several of the country's largest oilfields. On Monday, Libyan troops clashed with militants in Benghazi resulting in at least nine deaths. The news underscored the government's inability to get a handle on the chaos.
Moving forward, investors will be looking to economic data for an indication of the world's economic health. With Iranian oil possibly entering markets in 2014, investors are looking for any indication of an increase in crude appetite.
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