Negotiators may have missed Tuesday's deadline, but they could still reach a deal to lift sanctions on Iranian oil exports today, which would send prices further south, analysts say.
"An agreement would trigger an instant price dip for Brent oil, but of no more than $5," said IHS Energy Insight vice president Victor Shum said by phone. While "a deal would be a breakthrough, it will only add to the supply glut in the oil markets and, potentially, push Brent towards $30 a barrel."
Negotiators from Iran and six world powers on Tehran's nuclear program failed to meet a deadline on Tuesday that would have paved the way to lift United Nations sanctions on Iranian oil exports. But talks will continue in Switzerland today.
Brent oil prices slipped in Asia on Wednesday morning amid speculation that negotiators could reach a deal. Brent oil futures were quoted at $54.90, down 0.4 percent on the previous day.
"[The talks have a] 70 percent chance of success and we estimate Brent would drop $5 on the news," Societe Generale commodities analyst Michael Wittner said in a note published on Sunday.
Flooding an oil glut
The exact timing of when and how much of Iran's oil will come to market depends on the wording of any framework agreement and whether sanctions will be lifted in phases or, as Iran hopes, in one swoop, analysts said.