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By Bloomberg

Oil extended its decline after the biggest weekly drop since March as investors weighed the prospects of Iran increasing crude exports in an oversupplied market.

Futures traded 1.7 percent lower in New York. U.S. and Iranian diplomats are digging in over the last remaining issues holding up a historic nuclear deal, casting doubt on earlier optimism that an accord could be announced as early as Monday. Saudi Arabia told OPEC it raised oil production to a record as the organization forecast stronger demand for its members’ crude in 2016.

Oil’s rebound from a six-year low has faltered as a rout in Chinese equities stokes speculation demand will weaken, while the prospect of sanctioned Iranian crude returning to markets threatens to swell a glut. Prices may fall further as the world remains “massively oversupplied,” before markets tighten in 2016 when output growth outside OPEC grinds to a halt, according to the International Energy Agency.

“Oil is responding more to Iran and China than to Greece,” Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, said by e-mail. “The idea that an Iran agreement is a done deal is essentially priced in -- right now a delay in the talks would be positive for oil prices.”

WTI, Brent

West Texas Intermediate for August delivery lost as much as $1.48 to $51.26 a barrel in electronic trading on the New York Mercantile Exchange and was at $51.85 a barrel at 1:20 p.m. London time. It lost 7.4 percent last week. The volume of all futures traded was 57 percent higher than the 100-day average. Prices have decreased 2.7 percent this year.

Brent for August settlement slid as much as $1.89, or 3.2 percent, to $56.84 a barrel on the London-based ICE Futures Europe exchange. Prices fell 2.6 percent last week. The European benchmark crude traded at a premium of $5.90 to WTI.

Greece reached an agreement with its creditors over the reforms needed to start talks for a third bailout in five years and remain in the euro. Prime Minister Alexis Tsipras surrendered to European demands for immediate action to qualify for as much as 86 billion euros ($96 billion) of aid.

U.S. Secretary of State John Kerry said Sunday he and Iranian Foreign Minister Mohammad Javad Zarif had a “very good” meeting and once again voiced optimism an agreement was within reach. After three missed deadlines, officials said a deal was almost complete and negotiators have given themselves through Monday to finish.

Iran Talks

There’s no guarantee a nuclear deal can be clinched Monday or Tuesday, Iran’s Deputy Foreign Minister Abbas Araghchi told reporters in Vienna Monday.

Iran’s plan to sell more oil and recapture market share is still a long way off, according to Goldman Sachs Group Inc., Bank of America Corp. and Societe Generale SA. Boosting exports by 500,000 barrels a day would take six to 12 months as the nation revives aging wells, the banks predict.

Saudi Arabia, the world’s biggest oil exporter, pumped 10.564 million barrels a day in June, exceeding a previous record set in 1980, according to data the kingdom submitted to the Organization of Petroleum Exporting Countries. The group expects demand for its crude to rise in 2016 as supply elsewhere falters and consumption growth quickens.

“An improvement towards a more balanced market” is likely in 2016 as consumption grows faster than supply, OPEC’s Vienna- based research department said Monday in its monthly market report.

Demand for OPEC’s crude will climb next year by 900,000 barrels a day to average 30.1 million a day, according to the report. That’s still about 1.2 million less than the group estimated it pumped in June. Global markets remain “massively oversupplied,” the International Energy Agency said.