LONDON: Brent crude oil steadied around $107 a barrel on Monday after world powers extended talks with Iran and eased sanctions on the Islamic republic slightly, opening the possibility of an eventual deal and further Iranian oil sales.
Iran and six world powers failed to meet a July 20 deadline for a settlement over Tehran's atomic activities, but held out hope of an eventual agreement by extending the negotiations for four more months.
The U.N. nuclear watchdog said in a report obtained by Reuters that Iran had moved to eliminate its most sensitive stockpile of enriched uranium gas under an interim nuclear deal reached last year.
The world powers agreed to let Iran access another $2.8 billion of its cash frozen abroad during the four-month period, although most sanctions on the Islamic Republic remained.
"Sanctions will remain lifted, meaning that Iran is still allowed to export a certain amount of crude oil ... this is what is pressuring the market lower," said Tamas Varga, analyst at oil brokers PVM in London.
Brent slipped 25 cents to $106.99 a barrel by 0830 GMT, while U.S. oil for August delivery was down 20 cents at $102.93 a barrel.
Investors kept an eye on the geopolitical crisis between Moscow and the West after the downing of a civilian airliner in Ukraine which pushed up oil prices last week.
Investors seemed reluctant to build a higher risk premium into oil prices, with the risk of supply disruptions from Russia looking limited for the time being, analysts said.
U.S. Secretary of State John Kerry laid out on Sunday what he called overwhelming evidence of Russian complicity in the shooting down of Malaysia Airlines flight MH17.
President Vladimir Putin so far appears unconcerned about increasing pressure that could lead to further sanctions against one of the world's top oil producers.
Hans van Cleef, senior energy economist at ABN Amro in Amsterdam, said investors were "rebalancing" the risk premium in oil markets.
"We don't see an escalation of the whole Russia tensions leading towards oil or gas export disruptions," van Cleef said.
Easing worries over Iraq oil supplies and weak physical demand from refiners struggling with low processing profits have contributed to a drop of more than 7 percent in oil prices since a peak above $115 a barrel last month.
But pressure on oil will continue in the long term as a modest rise in demand is balanced by supply, van Cleef said.
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