By Claire Milhench
LONDON (Reuters) - Oil prices fell on Friday as investors awaited the outcome of Iranian nuclear talks which could lead to a big increase in Iranian crude exports at a time when the market is already over-supplied.
Dealers also kept an eye on negotiations to try to avert a Greek debt default and avoid Greece's exit from the euro.
A Greek default would be likely to strengthen the dollar against the euro, providing headwinds for oil and other commodities priced in dollars, economists say.
Brent crude for August
Analysts and traders said the market was being pressured by a mix of bearish factors, including the possibility that Iran may strike a deal with Western powers to end economic sanctions. A resumption of Iranian crude exports would exacerbate a global over-supply.
"A significant amount of unneeded oil will flow into the global markets in a relatively short time frame as Iran has a large volume of oil sitting in floating storage that is likely to hit the market very quickly," said Dominick Chirichella of the Energy Management Institute.
Ole Hansen, senior commodity strategist at Saxo Bank, suggested such a deal could push the market down 5-10 percent.
A glut of unsold North Sea and West African barrels in the Atlantic Basin is weighing on Brent, with the physical market struggling to find homes for crude that loaded on to tankers weeks ago.
North Sea Forties crude fell to its lowest level since the 2008 financial crisis on Thursday.
"There's a lot of crude oil that's trying to find a home ... That limits the potential for a crude oil rally and puts pressure on the price," said Olivier Jakob, managing director of Petromatrix.
Analysts said the U.S. products market was also weak. U.S. gasoline stocks unexpectedly built last week [EIA/S].
"The market is in trouble again. Two of the five (major oil futures) contracts are below key supports, and one of them is RBOB (gasoline) which is not a good sign," said Robin Bieber, a technical analyst at PVM Oil Associates.