Oil prices slipped below $93 a barrel Tuesday, continuing a downward trend that started early last month.
Last week, oil prices fell 0.76%, logging a sixth weekly decline, the longest string of losses since 1998. Volume also slid, with futures roughly 41% below the 100-day average.
Over the past two weeks, oil trading has been modestly light, with prices treading between $93 and $96 a barrel.
But prices are down from nearly $110 a barrel in early October. Here's what's going on…
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A trio of factors is presently pressuring oil prices:
- Iran Nuclear Talks: Oil prices dropped Tuesday ahead of intense negotiations aimed at
curbing Iran's nuclear program, which could lead to the return of Iranian oil to the market.
Iran is scheduled to resume talks this week in Geneva with six world powers in attempts to resolve a 10-year standoff over Iran's nuclear program. The United States, Great Britain, France, Russia, China, and Germany are proposing a gradual rollback of sanctions on Iran that have crippled Iran's economy, if Tehran takes clear steps to halt the advance of its nuclear program.
Sanctions implemented in response to the country's nuclear program purposely target Iran's energy sector. Indeed, oil exports are at the core of Iran's economy. According to the International Monetary Fund, revenues from oil exports fund roughly 66% of the Iranian government budget.
The concern hovering over oil traders is that Iranian oil could flood world markets, which are already well stocked.
"The price of Brent would be below $100 a barrel if Iran was able to produce and export its maximum potential," brokerage PVM wrote in a note to clients.
Commerzbank analysts noted that the possibility of Iran's million-barrels-per-day of oil returning to the markets has resulted in few speculators betting that the price of Brent crude will rise from present prices.