The Iran nuclear deal is getting more and more downside.
Oil prices were deepening their losses on Monday after Iran's top diplomat said his country would send its “final proposals” on the nuclear file by midnight local time (7:30 p.m. GMT).
The possibility of an agreement that would allow Iranian production to return to the market, even as Chinese demand suffers from a sluggish economy, made prices snort.
A barrel of Brent North Sea oil for October delivery was down 5.18% at US$93.08 around 11:50 a.m. GMT (7:50 a.m. EST) .
A barrel of US West Texas Intermediate (WTI) for September delivery fell 5.27% to US$87.24.
The gold market noir is focused on negotiations around the Iran nuclear deal, which could lead to the end of sanctions for this key member of the Organization of the Petroleum Exporting Countries (OPEC).
< p class="e-p">According to Minister Hossein Amir-Abdollahian, his country will announce its final proposals on the nuclear dossier on Monday, after he says the United States will have accepted two of the Iranian demands.
“If our proposals are accepted, we are ready to conclude [the discussions] and announce the agreement at a meeting of foreign ministers.
—Hossein Amir-Abdollahian, Iranian Foreign Minister
Nothing should be taken for granted until a deal is signed, warns Oanda analyst Craig Erlam, who predicts, however, that pressure on oil prices would intensify in the event of a success of the negotiations.
Prices also suffered from disappointing data in China.
In July, retail sales and industrial production experienced an unexpected slowdown, due to a rebound from COVID-19 and a crisis in real estate which weighed heavily on activity.
The bout of weakness in the Chinese economy is weighing on oil, and there is little chance of a rebound in the short term, summarizes Bjarne Schieldrop, analyst at SEB, in a note.
He finds it fairly clear that sluggish Chinese demand explains the decline in oil prices since June.
After s' to be soaring at the start of the year when the demand picked up with the end of the lockdowns and the start of Russia's invasion of Ukraine, prices fell more than 20% in two and a half months.