LONDON: Oil fell to around $107 a barrel on Monday after six major powers struck a fresh six-month deal with Iran to curb its nuclear programme.
Brent crude for February delivery was down 18 cents at $107.07 per barrel at 1522 GMT. The contract had settled 86 cents higher on Friday. U.S. crude slipped 60 cents to $92.12 per barrel, after closing $1.06 higher on Friday.
The deal between Iran and six major powers intended to pave the way for a solution to a long standoff over Tehran's nuclear ambitions will come into force on Jan. 20, the Iranian Foreign Ministry and the European Union said on Sunday.
World powers and Iran will "very likely" resume negotiations on the Islamic Republic's nuclear ambitions in February, shortly after an interim, six-month deal restricting its atomic work goes into effect, a diplomatic source told Reuters on Monday.
"There's confirmation of joint action so now they will be able to start working on a final agreement and in around six months we could have sanctions lifted or at least further easing," said Olivier Jakob, analyst at Petromatrix in Zug, Switzerland.
Sanctions against Iran over its nuclear programme have kept about 1 million barrels per day of oil off global markets, but an agreement reached on Nov. 24 last year raised hopes of a long-term deal that could see Iran resuming full exports.
Also helping to convince investors that Iranian oil supply would increase, U.S. President Barack Obama urged Congress not to impose additional sanctions on Iran, while the ruler of Dubai said the international community should ease sanctions on the Islamic Republic.
A partial end to supply disruption from Libya has also acted to pressure prices since the start of January.
Libya's El Sharara field is producing 300,000 barrels per day of oil compared to its peak output of about 340,000 bpd, Oil Minister Abdelbari Arusi said on Sunday, due to a standoff with rebel groups.
However, pointing to supply constraints in coming weeks, several buyers of Iraq's Basra Light oil will see a reduction in February volumes, trade sources said, an early setback in Iraq's plans to boost exports this year.
BUZZARD WATCH
Brent oil also came under pressure as operator Nexen confirmed the North Sea's Buzzard oilfield was ramping back up to full production after output problems last week.
Buzzard is the largest of the fields that contribute to the Forties blend, the most important of the North Sea crudes underpinning the Brent benchmark.
Crude oil prices could soften by mid-2014 due to some weakness in demand, Nizar Al-Adsani, chief executive of state-owned Kuwait Petroleum Corp, told reporters.
Iranian oil minister Bijan Zanganeh told his ministry's news service Shana that crude oil prices are not likely to change dramatically this year.
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