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 With a self-imposed deadline set for the end of the day, the United
States, Britain, France, Germany, Russia and China ramped up the
pace of negotiations with Iran in Switzerland over an outline deal
on Tehran's nuclear programme.
Disagreements on enrichment research and the pace of lifting
sanctions remained as hurdles that could scupper a deal to end a
12-year standoff between Iran and the West.
Russian Foreign Minister Sergei Lavrov told reporters in Moscow he
believed the talks had a good chance of success.
"The chances are high. They are probably not 100 percent but you can
never be 100 percent certain of anything," Lavrov said.
Western diplomats however played down expectations for the talks in
the Swiss city of Lausanne.
Brent was $1.25 lower at $55.04 a barrel by 1111 GMT and was heading
for a monthly drop of around 12 percent. U.S. crude was down 92
cents at $47.77 a barrel.
Both benchmark contracts were heading for a third consecutive
quarter of declines.
Oil prices extended two days of falls as investors said a deal in
Lausanne could lead to an increase in Iranian crude supply to a
market already weighed down by oversupply due to rising U.S. shale
production.
"If the flood gates to Iranian crude open, (prices) will probably
test this year's lows again," Daniel Ang, analyst at Singapore-based
brokerage Phillip Futures, told Reuters Global Oil Forum.
Iran could increase oil production by around 500,000 barrels per day
(bpd) within six months if sanctions are removed, and by an
additional 700,000 bpd within another year, according to estimates
by Facts Global Energy.
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Western sanctions have limited Iranian crude oil exports to around 1
million bpd, and shipping sources say Iran is storing at least 30
million barrels of oil on a supertankers.
BNP Paribas nevertheless did not expect a large increase in Iranian
oil exports.
"Whether or not there is a deal, we do not expect a flood of oil on
the market as consequence. Which sanctions will be lifted and the
uncertainty in the timing of lifting suggest that Iran will not be
in position to significantly add to the current oversupply in the
market," BNP chief oil and commodities strategist Harry
Tchilinguirian told Reuters Global Oil Forum.
U.S. commercial crude oil stocks are likely to have risen by 4.2
million barrels last week to a record high for a 12th week, a
Reuters poll showed ahead of weekly data by the American Petroleum
Institute.
(Additional reporting by Jacob Pedersen in Singapore; Editing by
Christopher Johnson and David Evans)
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