Oil prices turn volatile after Iran reaches nuke deal

Show Caption Hide Caption Iran's Foreign Minister Mohammad Javad Zarif: deal "a new chapter" After 18 days of intense and often fractious negotiation, diplomats on Tuesday declared that world powers and Iran had struck a landmark deal to curb Iran's nuclear program in exchange for billions of dollars in relief from international sanctions

Oil prices turned volatile Tuesday after Iran and six world powers reached a nuclear accord that clears the way for Tehran to unleash its oil onto world markets at levels not seen since the West imposed energy-related sanctions in 2012.

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Brent crude and West Texas Intermediate, or WTI, oil futures initially tumbled as much as 2% in early trading before paring losses later in the day. Brent was trading up 0.3% at $58.09 a barrel after dropping as low as $56.43. WTI fell as low $50.88 a barrel after recovering and rising 0.9% to $52.73.

Brent crude is an international oil benchmark that reflects global prices and any related turmoil, whereas WTI is focused on the North American market.

Iran has the world's fourth-largest oil reserves with about 157,530 million barrels, or 10% of the world's proven oil stores, according to the Organization of the Petroleum Exporting Countries, or OPEC, of which it is a member.

But Tehran's ability to export those reserves was severely curtailed by crippling international sanctions that bludgeoned its economy and targeted its industries.

Iran's oil exports have fallen in half since 2012 to about 1 million barrels a day. Its oil will now reach world markets at a time when crude prices have been under pressure for months due to a global supply glut.

Sara Vakhshouri, a Washington-based energy analyst at SVB Energy International, said that with Iran's sanctions lifted it would be able to boost its oil production from 2.9 million barrels a day to 4.2 million barrels a day by 2020.

Iran's oil production is worth about $60 billion a year on the world market.

Oil prices can also be expected to drop, Vakhshouri said, because Iran has as much as 37 million barrels of crude in storage on tankers floating in the Persian Gulf.