Oil futures slide after IAEA gives greenlight for Iran sanctions to be lifted

Oil futures moved sharply lower again at the start of the week after the world’s nuclear watchdog gave the ‘green-light’ for some of the economic sanctions on Iran to be lifted.

On Saturday the International Atomic Energy Agency said Tehran had met its commitments regarding curbs on its nuclear programme.

IAEA Director General Yukiya Amano hailed the agreement, saying relations between Iran and the IAEA had entered a new phase.

As of 0812GMT front month Brent crude futures were trading 2.81% lower at $28.17 per barrel on the ICE. West Texas Intermediate crude futures were down by 2.54% to $28.69 per barrel.

The Middle Eastern country had recently made claims that it could raise its exports of crude oil by as much as 500,000 barrels in the first week after sanctions were lifted.

However, analysts were sceptical.

The median forecast from twelve analysts polled by Bloomberg was that Iran would take six month to ramp up its output by that amount.

In the first month following the elimination of those sanctions the country’s oil output would only be 100,000 barrels higher, those same analysts predicted.

On Sunday, Saudi Arabia’s Tadawul All Share Index was down by 5.44% to 5,520.41 in anticipation of Iranian crude exports returning to international markets.

To take note of, on 15 January spreads on the high-yield debt of US energy companies spiked by a 102 basis points to a record 1,640 basis points.

Jim Reid at Deutsche Bank labelled the move – the largest ever on the basis of the broker’s data – as ‘eye-watering’.

Linked to the above, Reid also pointed out the 32% increase in non-performing corporate loans in the fourth quarter of 2015, most of it in the lender’s North American energy book.