Iran's foreign minister Manouchehr Mottaki told CNN talks are "in a new environment" and "new approaches" are possible.
A rising dollar Monday morning also helped push oil lower. The dollar strengthened against the euro and the British pound on expectation G-8 industrial leaders will verbally support the dollar at an upcoming economic summit in Japan.
Oil fell $5.14 to $140.15 per barrel Monday morning before recovering slightly to $141.30. The other major energy commodities also plunged in early Monday trading. Heating oil plummeted 13 cents to $3.97 per gallon, unleaded gasoline fell about 10 cents to $3.47 per gallon, and natural gas plunged 42 cents to $13.16 per million BTUs.
Economist Glen Langan, who argues that fundamentals (primarily rising demand) are the major factors determining oil's price, said legitimate progress on the Iran uranium enrichment issue would ease traders' concerns about Iran's supply. "Iran is still OPEC's No. 2 producer and a major exporter of oil, so lasting good news with regard to Iran will ease traders minds about tensions in and near the Persian Gulf. That will take some pressure off prices," Langan said. About 20% of the world's oil flows through the Persian Gulf and the Strait of Hormuz.
The United States and the European Union want Iran to end uranium enrichment, a technology which would give Iran the materials needed to produce a nuclear bomb. Iran says it wants the nuclear technology solely to produce electricity for civilian use. If one discounts oil sands, Iran has the world's second largest proved oil reserves, after Saudi Arabia.
Still, Langan cautioned that oil prices could quickly reverse if the talks with Iran hit another roadblock. The west, he said, is far from an agreement with Iran regarding its nuclear program. "Traders and those involved in oil won't be satisfied until the United Nations and other international bodies are monitoring the dismantling of its uranium enrichment infrastructure, and we're still far from that point," he said.
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