Crisis pushes oil to three-week low

Negotiations on Iran’s nuclear programme also likely to have an impact on prices this week

Oil fell more than $1 to below $62 per barrel yesterday, its lowest in three weeks, as Greece shut its banks and imposed capital controls, causing investors to flee from riskier assets and darkening the demand outlook.

Brent crude was down $1.66 at $61.60 a barrel by 1018 GMT. It fell to its lowest since June 5. It was heading for its lowest closing price since April 15.

US crude was down $1.40 at $58.23 a barrel, its lowest since June 9. Further weakness is likely as the situation in Greece will not be resolved until a referendum at the weekend on whether to accept conditions for a bailout, analysts said.

Uncertainty

“This may be the time when we break lower and into the $50s for Brent as we have a full week of uncertainty,” said Bjarne Schieldrop, head of commodity analysis at SEB in Oslo.

Negotiations on Iran’s disputed nuclear programme are also set to have an important impact on prices during the week.

Iran is backtracking from an interim nuclear agreement with world powers three months ago, Western officials suggested on Sunday, as US and Iranian officials said talks on a final accord would likely run past a June 30 deadline.

Securing an agreement would end the nuclear standoff between Iran and the West. This could eventually lead to suspending sanctions and allow Tehran to raise crude exports, adding to an already well-supplied world market.

With so many uncertainties, some market participants said it may be wise to take money off the table.

“Time to hunker down, go on holiday, step away from the market and opt for safety first,” said PVM brokers managing director David Hufton.