Uncertain Future: No Hope for Global Oil Prices to Recover in Near Future

Oil prices showed a sign of recovery on Tuesday following their biggest plunge since early February on Monday.

As Iran's nuclear deal with the West is nearing and Greece has moved closer to leaving the Eurozone, oil prices dropped nearly 8 percent, breaking below $53 a barrel on Monday.

By Tuesday morning, however, oil prices slightly rose. Brent oil is now sold at $57.21 a barrel (a 1.18 percent increase), while WTI is now $53.03 (a 0.95 percent increase).

A hope for a mid-year recovery in oil prices has disappeared after a number of political factors appeared on the horizon as of late. The collapse in the Chinese stock market, Greece's possible exit from the Eurozone and the upcoming Iranian nuclear deal show that the future of oil prices look pretty gloomy.

Iran is the most influential factor on oil prices. With close to 160 billion barrels of oil reserves, Iran has been blocked from the global market due to sanctions. This, however, is likely to change as the West and Iran are about to scramble for a deal before or on their July 9 deadline. When this happens, Iranian oil will flood the market, bringing the prices even further down.

Oil markets were rattled by Greece's decision to reject the EU's bailout offer. This spooked European financial markets, which in turn shook global oil prices on Monday.

And finally, China, one of the key oil buyers, faces a severe stock market sell-off. Equity markets in China have fallen by 30 percent since June. The government in Beijing was forced to come up with a series of support measures to stabilize shares. So far, the measures have had a limited effect.

Since last summer, global oil prices have dropped dramatically due to oversupply in the market. At its latest meeting on June 5, the Organization of the Petroleum Exporting Countries (OPEC) decided to keep its oil output levels unchanged, leading to a further slump in crude prices.