Oil futures bounced off an earlier four-month low on Friday, but analysts told CNBC that prices could plunge if an agreement on Iran's nuclear program is made this weekend.
Secretary of State John Kerry unexpectedly joined the ongoing negotiations in Geneva, sparking speculation that a preliminary deal could be reached soon. Iranian oil exports have been decimated by sanctions placed against the country's energy sector by the United States and Europe in response to its nuclear ambitions.
"I want to emphasize there is not an agreement at this point in time," Kerry told reporters in Geneva. "There are still some very important issues on the table that are unresolved. It is important for those to be properly, thoroughly addressed."
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However, energy analysts said that Kerry's participation—along with British Foreign Secretary William Hague, French Foreign Minister Laurent Fabius and German Foreign Minister Guido Westerwelle—is a positive sign. The dignitaries are all expected to meet with Iran Foreign Minister Javad Zarif on Friday.
"This news reinforces our existing expectation for an 'agreement in principle' or 'preliminary deal' or 'first step,'" analyst Kevin Book of ClearView Energy Partners said in a note to clients. "We reiterate our bearish bias for Brent crude."
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Book predicted that Brent crude oil futures could fall as much as $12 if a deal is reached to remove sanctions on Iran. Those measures have kept about 1 million barrels a day of Iranian crude out of the world market.
While Brent—the international benchmark for crude oil—has topped $100 a barrel for the better part of three years, prices have slid more than 10 percent since the end of August, due in part to an easing of tensions between Iran and the West. December Brent crude futures rose slightly Friday morning after falling to a session low of $102.98 a barrel, the lowest price since July.
NBC News reported from Geneva that Kerry's involvement in the talks is "the strongest sign yet that the first phase of a nuclear deal with Iran may be near."
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Even though such a deal would be preliminary, it's still significant. NBC News cited an unnamed senior U.S. official as saying that any agreement would reign in advances by Iran's nuclear program in return for a "limited" and "reversible" easing of economic sanctions.
—By CNBC's Sharon Epperson. Follow her on Twitter: