* Agreement curbs Iran nuclear activity, calms oil supplyfears
* Easing EU shipping insurance ban could smooth Iran crudeexports
* Coming Up: U.S. pending home sales; 1500 GMT (Updates with fresh quotes, changes dateline, prices,paragraphs 1 and 9)
By Joshua Franklin
London, Nov 25 (Reuters) - Brent crude fell by as much as $3a barrel on Monday before paring losses, as a breakthroughnuclear deal between world powers and Iran over the weekendeased oil supply fears.
Tough sanctions against Iran in the past two years haveslashed exports from the OPEC member by more than half and costTehran billions of dollars in revenue losses a month, keepingBrent above $100 a barrel despite weak global demand.
The deal halts Iran's most sensitive nuclear activity andalso suspends sanctions by the United States and the EuropeanUnion on several other sectors of Iran's economy for an initialsix-month period.
"It will take a while before we have the full lifting on thesanctions on Iran but you can expect that, if they go throughanother interim deal over the next six months, there will befurther lifting on the sanctions," Olivier Jakob at Petromatrixconsultancy in Switzerland said.
Brent was trading down $2.15 at $108.90 by 1040 GMT,after slipping $3 to hit a low of $108.05 earlier in thesession. U.S. oil fell $1.35 to $93.80.
The relief, which the U.S. State Department said is"limited, temporary, targeted and reversible," would allow about$4.2 billion of revenue from oil sales to be transferred ininstalments from accounts held by oil importing countries ifIran fulfils its commitment.
Apart from the revenue loss from reduced oil exports, Iranhas billions of dollars stuck in banks in countries which buyits oil because the sanctions have cut off transfer facilities.
The White House estimates that Iran has lost more than $80billion since the beginning of 2012 because of lost oil sales.It also estimates Tehran's earnings over the next six monthswill be $30 billion down compared with a six-month period of2011, before sanctions were imposed.
The head of the International Energy Agency said on Mondayit would be difficult for Iran to revive its oil output toformer levels quickly even if international restrictions on itsexports are lifted.
But an easing of the ban on European shipping insurance mayhelp smooth Iran's crude exports to its big Asian customers.
"Those sorts of steps, at the margins, do make it moreattractive, or at least less problematic to ship Iranian crude.It opens a chink in stopping Iranian crude getting out," saidDeutsche Bank's global head of commodity research Michael Lewis.
A tough road now lies ahead for President Barack Obama andother global leaders to turn the interim accord with Iran into acomprehensive agreement.
"Key groups remain suspicious of the reset in relations andcontend that the Iranians got the much better end of the Genevadeal," Barclays analysts said in a note to clients.
Israeli Prime Minister Benjamin Netanyahu denounced the dealas a "historic mistake." Obama also has to sell the accord tosceptics in Congress, including some in his own DemocraticParty, who have been pressing for more sanctions on Iran.
Oil prices may however find a floor as sanctions thatprevent energy companies from investing in Iran, and haveslashed its oil exports to around 1 million barrels per day(bpd) from 2.5 million bpd, remain in place.
Lower oil shipments from Libya - which remain disrupted byprotesters seizing shipping ports and have been running at afraction of the levels seen earlier this year of more than 1million bpd - will also underpin prices.
Investors are now eyeing a raft of housing reports from theUnited States to gauge the country's economic outlook. The Fed'slast policy meeting suggest officials are preparing to reducethe pace of bond-buying in coming months as long as the economycontinues to improve.
The Fed's massive asset-purchase programme has been a keydriver of investment in global commodities.
Petromatrix's Jakob said: "2014 is going to be the year ofthe double taper. You have to look forward to the tapering bythe U.S. Fed, but also for the tapering of the sanctions onIran." (Additional reporting by Manash Goswami and JacobGronholt-Pedersen in Singapore; editing by James Jukwey)
- Commodity Markets
- Politics & Government
- sanctions against Iran