Crude prices slipped for the second straight trading day Monday on concerns that diplomatic talks between six international governments and Iran could lift crude export sanctions.
International negotiators and Iran, an OPEC member, have until Tuesday to ink a deal that would allow the country to develop a nuclear program.
The deal could also end western sanctions against Iran that have restricted crude exports to 1 million barrels a day from a high of 2.5 million barrels per day since 2012, Reuters said.
“Regarding Iran, there are two possible outcomes: a framework deal or an extended deadline,” chief commodities analyst at SEB Market told the Reuters Global Oil Forum.
Brent crude fell to $55.60 per barrel on Monday, a 1.4 percent drop from Friday, while U.S. crude slid almost 1 percent to $48.43 per barrel.
Investors are concerned that a nuclear deal could flood already swollen crude inventories with even more oil.
According to OPEC Iran currently produces about 3.5 million barrels of crude per day.
Earlier this month U.S crude stores hit 448.9 billion barrels excluding the Strategic Petroleum Reserve, an 80 year high, thanks in part to the nearly 1 million extra barrels per day the U.S. has been adding to stores through production and importing.
According to the U.S. Energy Information Association the United States is currently using about 63 percent of its total storage capacity.
Weak international currencies are putting further pressure on crude prices as commodities denominated in U.S. dollars become more expensive for foreign investors.
Analysts at Goldman Sachs have warned that a stronger U.S. dollar could push oil prices back down to $40 per barrel.
The Iran talks come on the heels of yet another announcement from Saudi Arabia that said the oil rich kingdom will not curb production to stabilize global prices.
Saudi oil minister Ali Al-Naimi told reporters at an energy conference in Riyadh last week that non-OPEC producers will also have to implement cuts before OPEC members trim their output.
“The production of OPEC is 30 percent of the market, 70 percent from non-OPEC…everybody is supposed to participate if we want to improve prices,” Al-Naimi said.
OPEC is scheduled to meet in Vienna on June 5.