Oil sinks on US and Iran deal report

US and Iran are reportedly close to an interim deal on nuclear enrichment and oil exports, according to the Middle East Eye.

Talks have taken place between negotiators, but it’s unclear if senior officials support the agreement.

The deal would allow Iran to export up to 1 million barrels of oil per day and access frozen funds abroad.

Concerns about increased oil supply from Iran have led to a heavy sell-off in the market, causing Brent crude prices to drop by $3 to around $74.

Economic worries, including high US jobless claims and Germany’s negative growth, have also contributed to the decline. Companies in the US shale sector are facing squeezed profit margins and may experience further strain if oil falls below $65.

What next for oil markets

Investors’ focus will now shift to the upcoming decision of the Federal Reserve regarding interest rates during its next meeting.

If the Federal Reserve chooses to halt its cycle of raising rates, it is likely to have a stimulating effect on the crude market. This decision would signify reduced economic pressure in the United States, the largest consumer of crude oil globally.

Additionally, it would impact the value of the U.S. dollar, causing commodities such as oil, which are priced in U.S. currency, to become more affordable for foreign buyers.