Brent oil price remains at a three month high near $111 a barrel

The price of Brent crude oil is trading near $111 a barrel mid-Tuesday and remains at three month highs, spurred on by uncertain nuclear negotiations with Iran that have helped support European oil prices, as events in the Middle East continue to cause oil prices to fluctuate.

Latest Brent Oil Price

In London, Brent crude oil futures for January 2014 delivery was trading at $111.32 a barrel, 12:44 GMT on the ICE Futures Exchange. The contract was at $111.67 a barrel earlier in today’s session.

Iran Nuclear Negotiations

Foreign ministers from world powers struggled last Saturday to nail down a landmark nuclear deal with Iran, with US Secretary of State John Kerry announcing his imminent departure and Iran’s chief negotiator downbeat.

The head of the UN’s nuclear agency, Yukiya Amano, has warned it will “take some time” before work can begin on verifying whether Iran is complying with a deal on its nuclear programme.

Iran agreed late November to curb some nuclear activities for six months in return for sanctions relief. The deal requires increased UN inspections of Iran’s nuclear sites including the Arak heavy water plant.

Iran insists its current nuclear programme is peaceful, but has failed to allay the international community’s suspicions it is aimed at acquiring atomic weapons.

The world’s largest economies want Iran to stop enriching uranium to a fissile purity of 20 percent, close to weapons grade, but while allowing it to continue enrichment to lower levels. That would be a step back from successive UN Security Council resolutions that have called for Iran to halt all uranium enrichment.

Iran’s Oil Market

Tough international sanctions on Iran’s vast oil and gas wealth aren’t going to disappear overnight, but last week’s interim nuclear accord opens the door for Iran’s return to oil influence.

Iranian officials are already putting out feelers to western oil majors and leaders of other OPEC nations, hoping to stake out room on the international market for the Islamic Republic’s oil. It could be a welcome addition, as supply disruptions in Libya, Nigeria, and elsewhere continue to rattle investors. Still, production in the US and Saudi Arabia is booming, and neither country is likely to slow down anytime soon.

Brent $100 Minimum Price

Iranian oil exports have plummeted in the last two years, from more than 2 million barrels per day in early 2012 to an average of 1.1 million barrels per day in the first nine months of 2013, according to the IEA (International Energy Agency).

“The bottom line is the Iranians don’t want to rock the boat and put $100 oil under threat, so they need the cooperation of the Saudis.” said energy consultant Mehdi Varzi, formerly of state National Iranian Oil Company. It’s why Iranian Foreign Minister Javad Zarif, on a tour of Gulf Arab states this weekend, expressed interest in working more closely with Saudi Arabia, one of America’s strongest allies in the Middle East.

Oil prices fell last week on news of constructive talks with Iran, but after a couple of trading sessions the news seems to have been shrugged off. That’s not to say that oil prices won’t be weak in coming months.

Meanwhile, the Iranian administration has set oil price to $100 per barrel in the next year’s national budget bill, IRNA quoted Iranian MP Ja’far Qaderi as saying last Sunday.

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Brent oil price remains at a three month high near $111 a barrel