HONG KONG � Talks over a possible relaxation of sanctions against Iran that may increase global oil supplies kept crude-oil futures near a week�s low Monday, while a supply disruption due to Saudi airstrikes on Yemen looked increasingly unlikely.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in May CLK5,�-1.56%�� traded at $48.09 a barrel, down 86 cents, or 1.8%, in the Globex electronic session. May Brent crude�LCOK5,�-0.74%��on London�s ICE Futures exchange was down 56 cents, or 1%, to $55.86 a barrel.

Investors awaited the outcome of a Tuesday deadline for talks between Iran and six world powers over its nuclear program.

�Any relaxation of Iran oil sanctions could see increased exports adding to swelling global supplies and further pressuring prices,� ANZ said.

Iran currently exports around one million barrels of oil per day, but has been producing in excess of three million barrels per day at various times over the past year and storing this in tankers and onshore facilities, ANZ said, adding that the country may have a stockpile of over 30 million barrels.

Prices had surged last week after Saudi Arabia and its allies launched airstrikes against Iran-linked Houthi militants in Yemen. But the threat of a potential disruption to oil supplies due to the conflict now looks increasingly remote, with the fighting taking place far from areas where oil tankers pass through.

�Just like most geopolitical events, the initial gains quickly eroded without any physical disruption,� a Morgan Stanley report said.

Investors were also worried that the Saudi strike on Iran-backed rebel groups in Yemen may jeopardize the talks over Iran�s nuclear program, but those fears appear misplaced, analysts said.

The drop in oil prices combined with strong refinery margins would likely boost demand from Asian buyers such as China and India, which are looking to build reserves to take advantage of cheaper supplies.

By Market Watch