Oil prices fell in early Asian trade on Monday as the market digested a limited deal between Western power and Iran over the scope of Tehran’s nuclear program and how it may affect supply and demand in the near term. Markets were still digesting a deal reached at the weekend that relaxes economic sanctions for the next six months in hopes Western powers can reach a broader agreement on nuclear-arms talks.
But the deal doesn’t directly ease restrictions on crude purchases by countries like the United States, though it makes the logistics a bit easier on sales and finance to countries that do buy Iranian crude. The agreement also will allow Iran to regain access to much-needed goods, including parts for aircraft and cars, and will allow the country to sell refined petrochemical products in global markets.
Fuel-intensive companies, such as airlines and travel firms, received a boost on the stock markets as a result. International Airlines Group, the owner of British Airways and Iberia, was up 2.87% in lunchtime trading, while Air France KLM rose 3.11%. Travel operator Thomas Cook lifted 3.68%.
Over the years, sanctions have taken a serious toll on Iran’s economy and people. Since 1979, the United States has led international efforts to use sanctions to influence Iran’s policies, including Iran’s uranium enrichment program, which Western governments fear is intended for developing the capability to produce nuclear weapons. Iran counters that its nuclear program is for civilian purposes, including generating electricity and medical purposes.
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