Oil prices tumbled Monday as Iran and six world powers closed in on a nuclear deal that would end sanctions on the Islamic Republic and let more Iranian oil on to world markets.

News of European leaders agreement on a bailout loan for Athens, which should allow Greece to stay in the eurozone, helped pare early losses.

Brent crude for August fell $1.89 to a low of $56.84 a barrel before rallying back to around $57.30 by 4:40 am EDT. US light crude, also known as West Texas Intermediate (WTI), was down $1.15 at $51.59 a barrel.

Iran and six world powers are reportedly on the brink of finding a nuclear deal that would bring sanctions relief in exchange for curbs on Tehran's nuclear program.

A senior Iranian negotiator said a nuclear deal would be completed but cautioned that there was work to be done and he could not promise the talks would finish either Monday or Tuesday.

"I cannot promise whether the remaining issues can be resolved tonight or tomorrow night," Iran's Tasnim news agency quoted Deputy Foreign Minister Abbas Araqchi as ­saying.

The chance of Iran adding to a global oil surplus at a time of weak demand led some analysts to forecast more oil falls.

Although analysts say it would take until 2016 before Iran would be able to return to full-scale exports, most estimate that a jump of 200,000 barrels per day in exports could be seen in the short term.

With oversupply ongoing and abundant economic risk, several banks have lowered their oil price forecasts.

Bank of America Merrill Lynch said US crude prices "could soon drop well below our $50 per barrel target" in the third quarter of 2015.

Commerzbank said a fall below $55 per barrel in Brent and below $50 per barrel in US crude was "conceivable."

Oil prices pared early sharp losses after European Council President Donald Tusk said eurozone leaders had "unanimously reached agreement" on a deal for Greece.

But the oil market remained bearish.

"Implementation risks remain, and a possible nuclear deal with Iran should limit the upside," said Carsten Fritsch, oil and commodities analyst at Commerzbank in Frankfurt.

Reuters