As a crucial deadline in talks between the West and Iran about its nuclear program looms, analysts warned that a successful deal could further compound the glut in global oil markets.
Representatives from the U.S., U.K., France, Germany, Russia and China met once again Monday with Iranian officials at the luxury Beau-Rivage Palace hotel in Lausanne, Switzerland. Just the hint of a possible deal weighed on oil markets, with West Texas Intermediate (WTI) futures falling 1.6 percent to 48.08 a barrel by 9:00 a.m. London time, and Brent crude futures falling to $55.93 a barrel.
Here, CNBC highlights the key points surrounding a potential accord with Iran and how this could affect a commodity that has seen a dramatic fall since mid-June last year.
The negotiations are the culmination of a 12-year standoff between the United Nations Security Council and the Middle Eastern nation. Sanctions were imposed on Iran in 2006 for its failure to halt is uranium enrichment following claims that it was trying to build a nuclear weapon. The country has repeatedly denied such claims, however, and is now seeking an end to the penalties, which have blocked the import and export of sensitive nuclear materials and frozen the assets of people involved with the program.
Meanwhile, global powers are trying to achieve a peaceful resolution which prevents Iran from building nuclear weapons and curbs it uranium enrichment, but also allows it back into the international community and relaxes the sanctions.
Will there be a deal?
With a deadline on Tuesday, March 31, negotiations are already at a key stage and are likely to continue into the eleventh hour. However, with so many potential stumbling blocks, many analysts are saying the chances of a successful accord are too close to call.
Michael Wittner, global head of oil research at Societe Generale, was a little more optimistic, however. In a research note Monday, he said there was a 70 percent chance of success. Seth Kleinman, global head of energy strategy at Citi, also said Monday that the likelihood of a comprehensive deal being done had “risen significantly.”