Oil dips to near $106 amid Iran leader change

BANGKOK (AP) — The price of crude fell Tuesday after the swearing-in of a new leader in Iran raised hopes for less tension between the oil-producing Islamic republic and the West.

Benchmark crude for September delivery was down 35 cents to $106.21 per barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract fell 38 cents to close at $106.56 on the Nymex on Monday.

Michael Hewson, senior market analyst at CMC Markets, said the “softer” oil price could be attributed to an expected easing of tensions between the U.S. and Iran, whose new leader, Hasan Rouhani, took office Sunday. Rouhani is a moderate cleric who has called for a dialogue with the West.

Iran has faced international oil and banking sanctions over its nuclear program and fears it is being used to develop atomic weapons. Having a new leadership in Tehran “has raised some optimism that this new relationship dynamic will augur a much less confrontational relationship between Iran and the US,” Hewson said in an email commentary. “The reopening of a Libyan terminal has also helped to weigh on Brent prices as new supply comes on stream.”

Meanwhile, the U.S. Energy Department, the International Energy Agency and the Organization of Petroleum Exporting Countries will this week release their latest assessments of the energy markets, including forecasts for worldwide demand for oil. Analysts are anticipating some downward revisions, given a slowdown in China’s economy.

Brent crude, traded on the ICE Futures exchange in London, fell 20 cents to $108.50 per barrel.

In other energy futures trading on the Nymex:

— Heating oil fell 1.3 cents to $3.039 a gallon.

— Natural gas rose 0.6 cent to $3.325 per 1,000 cubic feet.

— Wholesale gasoline fell 1.2 cents to $2.938 a gallon.

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