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27 Nov 2013
Prices recovering from crude Iranian reaction
FXstreet.com (London) - Crude prices are rebounding on doubts that the Iran nuclear accord signed earlier this week will have a major effect on oil supply in the short to medium term.
The accord, signed in Geneva on Monday following protracted negotiations will see Iran freeze or roll back current uranium enrichment programmes to signal that they do not intend to enrich to weapons grade.
Iran will also give greater freedom and access to UN weapons inspectors in exchange for a lifting of USD7bn of sanctions. However these sanctions do not include the bulk of the sanctions placed on Iranian financial institutions which have hindered oil production.
As part of the agreements, the European Union will lift the ban on insurance of vessels transporting Iranian oil, however this will produce a limited potential upside of around 300,000 barrels a day.
Iran was OPEC’s sixth-largest oil producer last month, with 2.6 million barrels a day.
While the accord should limit the odds of a squeeze on Iran’s exports, it will not mean an immediate increase in exports.
Crude sold off on the signing of the accord, but today has begun regaining ground on the acceptance than any changes to output will be in the much longer term.
Brent futures for January delivery have climbed 46 cents to USD111.34 a barrel.
The accord, signed in Geneva on Monday following protracted negotiations will see Iran freeze or roll back current uranium enrichment programmes to signal that they do not intend to enrich to weapons grade.
Iran will also give greater freedom and access to UN weapons inspectors in exchange for a lifting of USD7bn of sanctions. However these sanctions do not include the bulk of the sanctions placed on Iranian financial institutions which have hindered oil production.
As part of the agreements, the European Union will lift the ban on insurance of vessels transporting Iranian oil, however this will produce a limited potential upside of around 300,000 barrels a day.
Iran was OPEC’s sixth-largest oil producer last month, with 2.6 million barrels a day.
While the accord should limit the odds of a squeeze on Iran’s exports, it will not mean an immediate increase in exports.
Crude sold off on the signing of the accord, but today has begun regaining ground on the acceptance than any changes to output will be in the much longer term.
Brent futures for January delivery have climbed 46 cents to USD111.34 a barrel.