The price of Brent crude oil fell towards $55 a barrel on Tuesday, as negotiations over a nuclear deal between Iran and six world powers entered their last day.
Reuters reported that Brent and US crude have both dropped 89 cents to $55.40 and $47.79 a barrel respectively.
The nuclear deal is expected to ease sanctions, and allow more Iranian crude into world markets.
The US, the UK, France, Germany, Russia and China are negotiating with Iran in Switzerland on an outline deal over Tehran’s nuclear programme.
Phillip Futures analyst Daniel Ang told Reuters Global Oil Forum, "If the flood gates to Iranian crude open, (prices) will probably test this year’s lows again."
Facts Global Energy estimates that Iran’s oil production is expected to rise by around 500,000 barrels per day (bpd) within six months if sanctions are removed, and by a further 700,000bpd within another year.
Shipping sources say Iran is storing approximately 30 million barrels of oil on its fleet of supertankers, as Western sanctions have limited the country’s crude oil exports to around one million bpd.
Meanwhile, a stronger US dollar has also weighed heavily on oil prices. A poll by Reuters showed that US commercial crude oil stocks are likely to have increased by 4.2 million barrels last week, to a record high for a 12th week.