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Oil declines more than $1 as the G7 discusses the Iran nuclear agreement and Russia

Image: Reuters Berita 24 English -  Oil prices fell more than $1 per barrel on Monday as investors watched the G7 summit this week for poten...

Image: Reuters

Berita 24 English - Oil prices fell more than $1 per barrel on Monday as investors watched the G7 summit this week for potential steps on Russian oil shipments and a resurrection of the Iran nuclear deal as concerns about the state of the world economy dampened the outlook for oil consumption.

After recovering 2.8 percent on Friday, Brent crude futures dropped $1.42, or 1.3 percent, to $111.70 a barrel by 00:10 GMT. Following a 3.2 percent increase in the previous session, U.S. West Texas Intermediate crude was trading at $106.08 per barrel, down $1.54 or 1.4 percent.

Last week, both contracts experienced their second consecutive weekly loss as the dollar gained strength and recession fears grew due to interest rate increases in important economies. Despite this, crude and oil product supply remained constrained as a result of Western sanctions that prevented some purchasers from purchasing Russian oil, keeping oil prices above $100 a barrel.

This week, leaders of the Group of Seven (G7) wealthy nations are anticipated to debate ways to deal with growing energy costs, alternatives to importing Russian oil and gas, and additional sanctions that do not worsen inflation.

In order to reduce Russia's earnings while minimising the harm to other economies, these steps might include a price ceiling on the export of Russian crude and oil products.

Vivek Dhar, an analyst with Commonwealth Bank of Australia, wrote in a note that it is "unclear if a price cap will achieve this goal."

There is still nothing preventing Russia from forbidding the export of crude oil and processed products to G7 nations in response to a price cap, worsening the current shortage conditions in the markets for crude oil and refined products worldwide.

The European Union's foreign policy leader met with senior Iranian officials to try to restart the halted negotiations, and the G7 will also talk about the possibility of doing the same, a French presidency official said on Sunday.

According to CMC Markets analyst Tina Teng, traders may be paying close attention to the possibility of resuming nuclear negotiations with Iran this week.

Additionally, as European states struggle to diversify supply, some of the G7 leaders are pushing for a recognition of the need for extra financing for fossil energy projects, two sources told Reuters on Sunday.

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