India Ratings and Research in a recent report said the Iran pact will lower insurance and transportation costs, reducing the overall landed cost of Iranian oil in India.
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Oil’s rebound from a six-year low in March has faltered amid signs the global surplus will persist.
Brent crude was trading 2 cents lower at $56.11 a barrel, after settling down 91 cents. As a result, over the course of the last month, crude oil futures lost substantial value.
Declining oil prices are triggered by a stronger U.S. dollar, a slowdown in the Chinese economy, and additional oil supply from Iran after the landmark deal.
US September crude was down $1 at $49.86 a barrel at 1655 GMT. Prices were swept up in a broader selloff in raw materials, which have fallen to a 13-year low as the dollar strengthens and concerns grow over economic growth in China.
Iran’s oil minister Bijan Zanganeh said on Monday that Tehran was set to resume oil deliveries that declined due to sanctions. Still, OPEC delegates from Gulf states and other nations say the drop in prices is likely to be short term and will not deflect the cartel from its policy of keeping output high to defend market share. At 463.9 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years.
In the coming week, investors would be closely watching the weekly crude oil report from the US Energy Information Administration, especially the inventory levels for the week ended July 17.
In 2013, Rosneft and CNPC established an agreement on supply of 365 million tons of crude oil over 25 years, the amount of the transaction was $270 billion.
Pressure has been rising on the Organization of the Petroleum Exporting Countries (OPEC) to adjust production in the face of an expected rise in Iranian exports if sanctions are loosened.
Brent North Sea crude for delivery in September, the global benchmark, dropped to US$55.27 a barrel in London trade, down 86 cents from Wednesday’s settlement.
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Iran’s stockpile of the ultra light oil is building up each month as Dragon Aromatics, the biggest buyer of South Pars condensate in China, has been shut since April after a fire. Demand for Opec’s crude will climb next year by 900,000 barrels a day to average 30.1m, according to the IEA, about 1.2m less than the group estimated it pumped in June.
