Oil slips more than $1 as G7 debate Iran-Russia nuclear deal


Crude oil storage tanks are seen at the Kinder Morgan Terminal in Sherwood Park, near Edmonton, Alberta, Canada, November 14, 2016. REUTERS/Chris Helgren

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SINGAPORE, June 27 (Reuters) – Oil prices fell by more than $1 a barrel on Monday, as global economic concerns weighed on oil demand prospects, while investors watched this week’s G7 meeting for possible moves regarding Russian oil exports and eyeing a revival of the Iran nuclear deal.

Brent crude futures were down $1.42, or 1.3%, at $111.70 a barrel by 0010 GMT after recovering 2.8% on Friday. US West Texas Intermediate crude was at $106.08 a barrel, down $1.54 or 1.4%, after rising 3.2% in the previous session.

Both contracts posted their second weekly decline last week as rate hikes in major economies strengthened the dollar and stoked recession fears. However, oil prices remained well supported above $100 a barrel as supplies of crude and oil products remained tight after Western sanctions put Russian oil out of reach for some buyers.

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Rich-nation leaders in the Group of Seven (G7) are expected this week to discuss options to combat rising energy prices and replace Russian oil and gas imports, as well as other sanctions that don’t exacerbate inflation. Continue reading

These measures include a possible price cap on Russian crude oil and oil products exports, aimed at curbing Russia’s revenues while reducing damage to other economies. Continue reading

“It is unclear whether a price cap will achieve this result,” Commonwealth Bank of Australia analyst Vivek Dhar said in a statement.

“There is still nothing preventing Russia from banning oil and refined product exports to the G7 economies in response to a price cap that exacerbates shortage conditions in global oil and refined products markets.”

The G7 will also discuss the prospect of resuming nuclear talks with Iran after the EU’s foreign policy chief met with senior officials in Tehran to try to break deadlocked negotiations, a French Presidency official said on Sunday. Continue reading

“This week, traders’ focus could be on a possible resumption of nuclear talks with Iran, which could lead to a revival in Iran’s oil exports,” said Tina Teng, an analyst at CMC Markets.

In addition, some G7 leaders are pushing for recognition of the need for new financing for fossil fuel investments, two sources told Reuters on Sunday, as European states scramble to diversify supplies. Continue reading

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Reporting by Florence Tan; Editing by Christopher Cushing

Our standards: The Thomson Reuters Trust Principles.


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