As Iran and the six world powers reached a nuclear agreement by their deadline, crude oil prices fell further on Tuesday, pulled down by prospects of easing of sanctions imposed on the Persian Gulf nation.
London Brent crude dropped to $56.96 a barrel of nearly 160 litres, while US crude was trading down at $51.12. The Indian basket crude oil traded on Monday, the deadline for the nuclear deal, at $57.19 per barrel.
The Indian basket had fallen last Tuesday to $56 a barrel, as China's stock market-plunged and the Greek crisis revived the spectre of weaker economic growth that could impact oil demand.
China's economic growth in the second quarter is forecast to be the weakest since the 2008-2009 global financial crisis.
The International Energy Agency said last week that Iran has at least 17 million barrels of crude oil stored and ready to be shipped.
"Iran would seek to increase its oil exports to the global market if a nuclear deal is reached and the western sanctions are lifted," Iranian Oil Minister Bijan Zangeneh said recently.
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He said Iran can restore its production of one million barrels per day fairly quickly, which supply can hit the market in less than six months.
This would add to output from the Organisation of Petroleum Exporting Countries (OPEC) whose production levels are already at a three-year high, at a time when the market remains quite over supplied.
OPEC released its monthly oil market report on Monday, with Saudi Arabia reporting a record crude oil production of 10.6 million barrels per day (bpd) in June, an increase of more than 200,000 bpd on the previous month.
Stable crude oil prices in the international markets would help India manage its macro-economy well, chief economic advisor Arvind Subramanian has said.
"I do not see oil prices going beyond $80-85 a barrel (about 160 litres), given the fundamental changes in the market. If oil prices remain steady even at that ($80-85) level, I think we can manage the economy well," Subramanian said at a lecture late last month at the Bangalore International Centre.
"Besides decline in our oil import bill, we have seen fundamental shifts in the international market, which has helped crude oil prices remain steady," he said.
--Indo-Asian News Service
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