Oil Market Update (April 17, 2012)

By Adam Currie — Exclusive to Oil Investing News

Brent crude fell on Monday, extending last week’s dip, after initial talks about Iran’s nuclear program resulted in an agreement to reconvene in May.

Brent oil for June settlement dropped as much as $2.67 to $118.54 a barrel on the ICE Futures Europe exchange on Monday. Meanwhile, crude for May delivery slipped 40 cents to $102.34 a barrel in trading on the New York Mercantile Exchange.

The European Union’s foreign policy chief has stated that the United Nations’ five permanent Security Council members, as well as Germany, will meet Iranian delegates in Baghdad on May 23 after the conclusion of “constructive” talks in Istanbul late last week.

“It’s definitely a step forward that the parties are at least talking again,” said Thorbjorn Bak Jensen, an analyst at Global Risk Management in Denmark. “There is a significant risk premium in prices related to Iran, and even small steps towards a solution can have large impacts.”

Catherine Ashton, the EU’s foreign policy chief and lead negotiator in dealings with Iran, stated that last week’s discussions were constructive.

Israel’s Prime Minister, Benjamin Netanyahu, has criticized the outcome, stating that it is allowing Iran more time to continue enriching uranium, a process capable of producing fuel for a nuclear bomb.

Concern that a military strike by Israel and the US against Iran’s nuclear facilities could disrupt global crude supplies has assisted in pushing crude up from $75 a barrel since October last year.

Iranian crude output has fallen in recent months as the US and Europe begin to impose economic sanctions on the Organization of the Petroleum Exporting Countries’ (OPEC) second-largest producer.