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Historic Iran deal hits oil price

Tuesday, July 14, 2015 - 02:06

Oil prices drop, pushing commodity-linked shares and currencies lower, after Iran and six world powers reach a historic nuclear deal expected to increase supply of Iranian crude on world markets. Hayley Platt reports

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It's taken nearly a decade of on-off negotiations with Iran to reach an agreement over its nuclear programme. But a deal has finally been done. Federica Mogherini is the EU's policy chief. (SOUNDBITE) (English) EU FOREIGN POLICY CHIEF, FEDERICA MOGHERINI, SAYING: "It is a decision that can open the way to a new chapter in international relations and show that diplomacy, co-ordination, co-operation can overcome decades of tensions." The prospect of more oil becoming available hit prices. US crude fell more than a dollar to just over $51 dollars a barrel. And Brent Crude futures tumbled 95 cents to just under $57 dollars. Jeremy Stretch is Head of FX Strategy at CIBC. SOUNDBITE: Jeremy Stretch, Head FX Strategy, CIBC, saying (English): "You overlay that with OPEC reducing demand expectations and inevitably that does suggest that the oil price is going to soften a little bit further at least in the short term. That's bad news for those oil producers but it's good news for consumers." Iran currently exports just over a million barrels of oil a day - half what it did prior to sanctions That's expected to increase by 60 percent within a year. US officials also say Iran will eventually get access to more than $100 billion in frozen assets. SOUNDBITE: Jeremy Stretch, Head of FX, CIBC, saying (English): "If we are going to see the removal of sanctions not just in the oil market but particularly in the energy sector, we will see a flow of funds coming back into the domestic market. Of course the removal of sanctions and the embargo potentially opens the way for some degree of inward investment and I think that is going to be hugely significant." Sanctions have been in place since 1979 They'll be lifted gradually and only if Iran complies with the terms of the agreement. That includes allowing international inspectors access to all nuclear sites. There are still a number of key issues to be resolved. But the agreement to limit Iran's nuclear enrichment programme is historic. It's the biggest country to rejoin the global economy since post-Communist eastern Europe in the early 1990s.