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Oil price drops after Iranian nuclear deal

26 Nov

DAX hits another record high as markets welcome Iranian nuclear deal – as it happened

by  –

The City of London.
The City of London. Photograph: Anthony Devlin/PA
Saudi Arabia's Foreign Minister Prince Saud al-Faisal speaking during a joint press conference with U.S. Secretary of State John Kerry in Riyadh yesterday.
Saudi Arabia’s Foreign Minister Prince Saud al-Faisal speaks during a joint press conference with U.S. Secretary of State John Kerry in Riyadh. Photograph: Jason Reed/AP

The historic deal over Iran’s nuclear programme agreed yesterday is driving down the price of oil and gold, and giving another nudge to already buoyant stock markets.

The price of a barrel of Brent crude slipped by over 2.5% already today, currently down $2.3 at $108.77/barrel. It follows the news that the tense negotiations in Geneva had delivered an agreement to restrict Tehran’s nuclear work –which some analysts believe could be the most important breakthrough in the region in years.

Hopes that tensions in the Middle East will be diminished by the deal are proving costly to gold bugs too.The bullion price shedding 1% to $1,229 per ounce, its lowest level since July.

The dollar has strengthened, pushing down the Japanese yen — cheering news for the Tokyo stock market where the Nikkei surged 1.5% to almost its highest level of 2013.

Stan Shamu of IG said the Iranian deal could have added to the “risk mood” in Asia today.

If sustained, lower oil prices could give the global economic recovery a helping hand, by lowering fuel costs for consumers and firms.

In Europe, the major stock markets have all opened a little higher – up around 0.5% in early trading.

Our latest news story on the deal, and how it was achieved, is here:

Secret US-Iran talks paved way for nuclear deal

It explains that Sunday’s deal will release restrictions on Iran’s trading of gold, petrochemicals, car and plane parts. In return, it will:

• Stop enriching uranium above 5%, reactor-grade, and dilute its stock of 20%-enriched uranium, removing a major proliferation concern.

• Not increase its stockpile of low-enriched uranium.

• Freeze its enrichment capacity by not installing any more centrifuges, leaving more than half of its existing 16,000 centrifuges inoperable.

• Not fuel or commission the heavy-water reactor it is building in Arak or build a reprocessing plant that could produce plutonium from the spent fuel.

• Accept more intrusive nuclear inspections by the International Atomic Energy Agency, including daily visits to some facilities.

The deal has been cheered in Iran, where negotiators were met by cheering crowds. But with Israel calling it a ‘historic mistake’, caution may still be needed.

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