Brent crude futures fell as much as $2.50, about 2%, to $108.63 as Monday commodities traders digested the interim deal reached this weekend to curb Iran's nuclear activities.
Analysts were predicting this kind of significant but not overwhelming market reaction. Western powers agreed they would begin lifting the ban on Iranian exports to their countries in six month's time. But Iran's oil sector has been hit hard by sanctions, and it may take some time for production to recover to pre-2010 levels. As Bloomberg reported:
"The agreement probably will have a 'somewhat muted' effect on oil prices, according to analysts including Mark Keenan, cross-commodity research strategist at Societe Generale in Singapore. 'We can, however, expect some price weakness as the market adjusts to the future prospect that Iranian exports will resume,' he said by e-mail."
Still, those barrels are coming back eventually, and the market has quickly digesting this fact.
Here's the chart:
U.S. crude futures, meanwhile are down about 0.8%.