SINGAPORE: Oil prices tumbled further in Asia on Tuesday after a ‘historic’ deal between Iran and Western powers that allows Iranian crude to flow back into the already saturated global market.
A strong US currency has also made the dollar-priced commodity more expensive, denting demand, analysts said.
US benchmark West Texas Intermediate for August delivery fell 75 cents to $51.45 and Brent crude for August eased 60 cents to $57.25 in afternoon Asian trade.
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"It seems that a deal is already in the final stages of being signed," said Daniel Ang, an investment analyst with Phillip Futures in Singapore, hours before the deal was sealed between Iran and major Western powers in Vienna.
"This is probably the biggest issue for the week for the oil market," he told AFP. The intense negotiations in the Austrian capital ran into the early hours Tuesday.
Foreign ministers of the six powers were to hold what was expected to be the final meeting Tuesday morning ahead of a planned announcement that would bring to a close an 18-day push to strike an accord.
The agreement seeks to curb what the West suspects are Iranian attempts to build a nuclear bomb and lead to a lifting of punishing economic sanctions, which have choked Tehran's oil exports.
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Analysts say that a return of Iranian crude to the market will worsen the current oversupply and further depress prices.
Adding to downward pressure, the dollar strengthened in Asian trade against the yen and euro after Greece reached a new bailout deal to keep it in the eurozone, making it easier for the US Federal Reserve to begin lifting interest rates.
The central bank had been concerned about announcing a hike while there was the possibility of a Greek euro exit, which would hit the global economy.