Oil prices steady after Iran-fuelled losses

LONDON (AFP) - World oil prices steadied Tuesday as trader scepticism over Iran's nuclear deal lingered and crude markets tracked the latest unrest in Libya, analysts said.

New York's main contract, West Texas Intermediate (WTI) for delivery in January rose 25 cents to US$94.34 (S$118.17) a barrel.

Brent North Sea crude for January dipped five cents to stand at US$110.95 a barrel in London midday deals.

Oil had retreated steeply in Asian trading hours on Monday in reaction to Sunday's deal, in which major powers and Iran agreed to some modest sanctions relief in exchange for tighter oversight of Iran's nuclear programme.

The deal was seen as boosting crude supplies, in turn weighing on oil futures.

Prices however pared losses to end only modestly lower in New York trade as scepticism set in.

"The initial knee-jerk sell off came with the easing of the build-up in geopolitical risk premium," Desmond Chua, analyst at traders CMC Markets.

"Nonetheless,the decline was short-lived as traders understood that the deal will not see a glut of oil supply." The deal agreed in Geneva between Iran and the so-called P5+1 nations - the United States, China, France, Britain, Russia and Germany - will deliver about US$7 billion in relief to Iran, according to US estimates, and will stand for six months while a more long-lasting solution is negotiated.

It includes giving Iran very limited access to its income from oil and other sales, frozen in banks overseas, to be used for humanitarian purposes.

While the deal protects the country's oil exports at current levels, it does not allow for further growth.

The Islamic republic has been crippled by a series of UN and US sanctions aimed at bringing an end to its nuclear drive, which the West claims is being used to develop atomic weapons. Iran denies the assertion.

"The deal did not include any easing of sanctions on Tehran's crude oil exports," said Fawad Razaqzada, analyst at traders Gain Capital.

"This means that, all else remaining equal, there won't be any further increase in the global supply of oil until at least six months from now when a longer-term agreement may be reached." He added: "Indeed, geopolitical risks across the Middle East and North Africa regions are still there."

In Libya, which like Iran is a member of the OPEC oil producing cartel, local officials on Tuesday called for civil disobedience including strikes for three days from in the eastern city of Benghazi after deadly clashes between radical Islamist fighters and the army.