Investing.com -- Crude oil futures plunged by more than 2% in afternoon trading hours, as the White House sent indications that negotiations with Iran on its nuclear program could extend beyond a deadline previously set for late Tuesday evening.
While briefing reporters on the negotiations on Tuesday afternoon, White House press secretary Josh Earnest said the United States is not opposed to continue talks with Iran as long as they are productive. The comments came as the sides reportedly moved closer to reaching the framework of a preliminary political accord aimed at limiting Iran's capabilities enough to keep a nuclear bomb out of reach.
Severe economic sanctions against Iran over the last three years have limited the nation's oil exports to roughly a million barrels per day. The easing of sanctions could saturate global oil markets with a glut of Iranian oil, which could further depress crude prices.
On the New York Mercantile Exchange, WTI Crude for May delivery plummeted 2.22% to 47.62 a barrel. WTI crude wavered between a daily-low of 47.32 in European afternoon trading to a high of 48.56 following Earnest's briefing.
On the Intercontinental Exchange (ICE), brent crude for May delivery dropped by 2.26% to 55.04 a barrel. Crude oil futures have dipped by more than 7% over the last three days.
Iran holds the world's fourth-highest level of crude oil reserves, according to the Energy Information Administration (EIA), a supply level (of 157 billion barrels) that amounts to approximately 10% of total global crude storage. The rigid sanctions, in turn, have boosted Iranian oil supply. Iran reportedly has hoarded 30 million barrels of oil on its fleet of offshore supertankers, Reuters reported last week.
Intense fighting in Yemen, meanwhile, continued to weigh on energy prices. On Monday, Saudi Arabian-led airstrikes killed 29 people, including women and children. The attacks came as the Saudi Arabian navy imposed a blockade on a number of ports throughout the country.
Oil prices surged late last week amid concerns that the closure of a strategically located strait connecting the Red Sea with the Gulf of Aden, could limit exports out of the area. The concerns eased after analysts from Goldman Sachs (NYSE:GS) told investors that the critical oil chokepoint could still be reached through an alternative route if the Bab el-Mandeb strait is shut down.
Oil prices are sensitive to any risky geopolitical news involving Saudi Arabia, the world's largest exporter of oil.
A spike in oil production in Saudi Arabia in March helped boost Opec's oil supply to its highest level since October. Opec reported that total output for March increased to 30.63 million barrels per day, up from a revised figure of 30.07 in February. Increased demand in Saudi oil exports from Asian customers, as well as improved weather in Iraq helped fuel the production increase.
In Nigeria, president Goodluck Jonathan conceded defeat to Muhammadu Buhari, a former military leader and former Nigerian minister of petroleum affairs in the 1970s. Plunging oil prices over the last nine months have crippled the economy of Africa's top oil producer.