Iranian hopes lead to a drop in oil prices
As peace in Iran looks, if not likely, then at least possible, the jitters which led to a rise in cr
With negotiations between Iran and six major world powers - the security council plus Germany - restarting, the price of oil dropped by around 2 per cent, to its lowest for a week, just under $122 a barrel.
The fear of a war with Iran has been just one of a number of factors pushing the price back up to its pre-crash highs, but it is certainly the most tangible for many traders. With hopes for a peaceful end to its nuclear ambitions looking more likely now than they have for a while, unfettered access to its vast reserves looks set to continue, and so the anticipated crunch in availability may not occur.
Counter-intuitively, so long as they stay short of actual war, the concern will be welcomed by Iran. The country exports around 2.6 billion barrels of crude a day, so the drop in price translates to a loss of around $5m compared to yesterday.
In the long-run, whatever the outcome with Iran, oil prices show no sign of slowing down. In July 2008, they hit their all-time high, at $133 a barrel, becoming a major issue in the US presidential election, before the economy decisively took that position; four years on, they aren't quite back at that level, but they are growing again. They are near to beating the previous post-crash high in April last year, and have been growing for the whole of 2012 to date. The panic when oil first broke $100 is starting to look very quaint indeed.