LONDON: Brent crude oil fell more than 2 percent to around $61 a barrel on Monday after Iran said a deal on its nuclear programme could be agreed this week if the West lifts sanctions, which could boost the country's oil exports.
International benchmark Brent was also depressed by a stronger dollar and reports of a rise in Libyan crude output, traders said, though US crude recovered to above $50 a barrel as industry monitor Genscape reported a smaller-than-expected build in crude stocks at the contract's delivery point.
Brent crude hit a low of $60.74 a barrel and was at $61.36 by 1534 GMT, down $1.22. Front-month Brent jumped 18 percent in February, the largest monthly rise since May 2009.
US crude was up 36 cents at $50.12 a barrel, with its discount to Brent narrowing to $11.24 having earlier touched $13.03, its widest since January 2014.
The US crude gain came after traders said Genscape reported that crude stocks at Cushing, Oklahoma, delivery point of the contract, rose by 1.4 million barrels last week, less than the 2.4 million barrel increase the week before.
Iranian Foreign Minister Mohammad Javad Zarif said a deal on Iran's nuclear programme could be concluded this week if the United States and other Western countries had sufficient political will and agreed to remove sanctions on Tehran.
"Our negotiating partners, particularly the Western countries and particularly the United States, must once and for all come to the understanding that sanctions and agreement don't go together," he said in Geneva.
US Secretary of State John Kerry said there had been some progress in the nuclear talks but there was a long way to go.
Iranian oil exports have been restricted by sanctions for several years as the United States and Europe responded to Tehran's nuclear programme, although Iran says its nuclear plans are peaceful.
Analysts say Iran could increase its oil sales fairly quickly if sanctions were lifted and may eventually be able to raise exports by up to 1 million barrels per day (bpd). A Reuters survey last week showed Iran pumped around 2.8 million bpd in February.
The dollar hit an 11-year high against a basket of currencies after a rate cut in China dented the Chinese yuan and also hit emerging Asian currencies.
Oil is priced in dollars on spot markets and a stronger US currency tends to depress fuel demand from holders of other currencies. Disruption to oil supplies from members of the Organization of the Petroleum Exporting Countries has helped support crude, with lower output from Libya and Iraq in January and February.
Libya's production has risen to more than 400,000 barrels per day (bpd), officials said. Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt, said much of the recent strength in oil had been due to speculative buying. "The market is still over-supplied," Fritsch told the Reuters Global Oil Forum.
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