Oil declines as Iran agrees to a UN nuclear inspection

Iran has recently allowed experts from the U.N. to inspect its nuclear facilities. This has allayed fears of a Middle East oil supply crisis and has triggered a decline in current crude oil prices.

U.N. Secretary General for International Atomic Energy Agency, Yukiya Amano, announced that Iran has indeed agreed to a nuclear facility inspection. Oil prices went down by 1 percent soon after Amano issued the encouraging news.

According to Director Kyle Cooper of the IAF Advisors, Iran’s move sends positive signals and may lessen tensions between Iran and OPEC, the U.N. plus several countries who are supporting the U.S.-led Iranian sanctions. On the other hand, he mentioned that the European crisis is quite far from over.

At the NYMEX, crude oil prices for June delivery dropped to $91.66 pb. The more dynamic July contract went down to $91.85 representing a 1.1 percent drop. Over a period of 14 days, there has been a significant downward trend in oil prices.

API’s announcement of a 1.48 million a barrel gain in stockpiles last week resulted in minimal shifts of prices. Stockpiles last week were at 386.2 million barrels – a peak level not seen since mid 1990. July contract went down by 1.4 percent to $91.60 per barrel.

At the ICE Future exchange, Brent crude oil price per barrel for July settlement slid 0.4 percent to $108.41.

Amano added that the signing of an inspection agreement between U.N. and Iran will follow soon. A series of discussions are slated regarding Iran’s nuclear project. The first was during April in Istanbul, led by U.S. and the U.K., among others. The second is set to occur in Baghdad.

United States envoy Robert Wood encouraged Iran to take advantage of the ensuing discussions to settle vital issues surrounding its nuclear program. He further emphasized the importance of parties to the discussion exercising transparency and cooperation.

Iran’s change of heart regarding the nuclear facilities inspection issue would allow more transparency on its part. Although it still maintains that its nuclear program is purely for non-military intentions.

U.N. representatives have been doing routine site visits on areas where Iran has been developing uranium, but there has been a pending request from U.N. to gain more access to other nuclear sites which the U.N. deems would need thorough inspection.

But some have remained skeptical. Prestige Economics LLC President Jason Schenker said that he wants to see Iran complying with the agreement from start to end. He further commented “I’ll believe it when I see it”.