The price of crude fell Tuesday, Aug 6 as the swearing-in of a new leader in Iran raised hopes for less tension between the oil-producing Islamic republic and the West, The Associated Press reports.
Benchmark crude for September delivery was down 12 cents to $106.44 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract fell 38 cents to close at $106.56 on the Nymex on Monday.
Michael Hewson, senior market analyst at CMC Markets, said the “softer” oil price could be attributed to an expected easing of tensions between the U.S. and Iran, whose new leader, Hasan Rouhani, took office Sunday. Rouhani is a moderate cleric who has called for a dialogue with the West.
Iran has faced international oil and banking sanctions over its nuclear program and fears it is being used to develop atomic weapons. Having a new leadership in Tehran “has raised some optimism that this new relationship dynamic will augur a much less confrontational relationship between Iran and the U.S.,” Hewson said in an email commentary. “The reopening of a Libyan terminal has also helped to weigh on Brent prices as new supply comes on stream.”
Meanwhile, the U.S. Energy Department, the International Energy Agency and the Organization of Petroleum Exporting Countries will this week release their latest assessments of the energy markets, including forecasts for worldwide demand for oil. Analysts are anticipating some downward revisions, given a slowdown in China’s economy.
Brent crude, traded on the ICE Futures exchange in London, fell 25 cents to $108.45 per barrel.