Oil falls on signs of diplomatic progress on Iran's nuclear program

NEW YORK, N.Y. – An important oil price benchmark dropped nearly three per cent Monday as tensions eased over Iran’s nuclear program.

Brent crude, which is used to price many kinds of international oil, lost US$3.15 to end the day at $118.68 per barrel in London.

Iran discussed its nuclear ambitions with the U.S. and five other countries at a weekend meeting in Istanbul. The meeting didn’t produce any concrete agreements, but analysts said the potential of fighting in the Persian Gulf goes down as long there are negotiations. Both sides agreed to meet again on May 23.

Iran, which threatened earlier this year to defend its nuclear program by closing off crucial oil shipping routes, now says that it can resolve Western concerns “quickly and easily.”

Foreign Minister Ali Akbar Salehi, who was quoted by the semiofficial ISNA news agency, also said it was time to end sanctions on the Islamic Republic. Western nations have worked to halt Iran’s oil trade this year in hopes of forcing the country to the negotiating table. The actions have curtailed oil sales that Iran relies on to run its government.

The drop in Brent could be significant for U.S. drivers because many U.S. refineries import international oil and turn it into gasoline.

Meanwhile, benchmark West Texas Intermediate crude rose 10 cents to finish at $102.93 per barrel in New York. The price of WTI rose on reports that federal regulators had approved a plan to transport oil away from oversupplied markets in the Midwest.

The U.S. Federal Energy Regulatory Commission said the Seaway Pipeline will begin moving oil from Cushing, Okla. to the Gulf Coast around May 17. Analysts and investors were expecting it to come online later in June. Reducing the amount of oil supplies in the Midwest will push the price of WTI closer to the international benchmark, analysts said.

The Seaway Pipeline is expected to initially transport 150,000 barrels of oil per day. That capacity will grow as high as 500,000 barrels per day in 2013.

U.S. gasoline prices were flat at a national average of $3.907 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service. Gasoline prices have levelled off during the past week, though experts still predict that they’ll climb higher by Memorial Day.

In Canada, the price at the pump averaged C$1.343 per litre, up from $1.286 per litre a month ago, according to

Natural gas futures closed back above US$2. The price rose 3.5 cents to end at $2.016 per 1,000 cubic feet. Last week, natural gas fell below $2 for the first time in more than a decade.

In other energy trading, heating oil lost 5.8 cents to finish at $3.1166 per gallon and gasoline futures gave up 7.91 cents to end at $3.267 per gallon.


Follow Chris Kahn on Twitter at