(Bloomberg) -- Oil extended losses following reports of progress being made in an effort to revive the Iran nuclear deal.Futures slumped as much as 3.1% in London on Tuesday. A Russian envoy in Vienna said that significant progress has been made in efforts to broker an agreement between Iran and the U.S., according to the BBC. A return to the 2015 nuclear deal could allow for the removal of U.S. sanctions on the Persian Gulf country’s crude exports, raising the prospects of more supply coming back to the market.Prices were already weak earlier in the session after Brent futures failed to sustain a rally past the key psychological $70-a-barrel mark, which it hasn’t closed above since May 2019.“Increased production out of Iran is already being priced in the market,” said Ryan Fitzmaurice, commodities strategist at Rabobank. “But there is still headline risk associated with the nuclear talks.”Further weighing on prices, concerns linger around the worsening Covid-19 crisis in India. The South Asian country’s gasoline exports soared 85% in the first half of May from the same period last month, according to Vortexa.“We’ve had a pretty robust rally, but the question continues to be if we’re going to see some slowdown because of continued issues in India,” said Bart Melek, head of commodity strategy at TD Securities. “The market’s going to need something fundamental happen for prices to break out” to the upside “and at this point we’re not getting it.”Still, oil is joining other commodities in a blistering rally this year, which is seeing crude prices up more than 35%, as raw materials emerge as a hedge against inflation. Much of Wall Street is calling for higher prices, with Goldman Sachs Group Inc. talking up the prospects of $80 a barrel crude. At the same time, the Organization of Petroleum Exporting Countries and its allies are boosting supply to meet rebounding demand.Meanwhile, shippers on the largest U.S. fuel pipeline say they can’t access the pipeline’s communications system, preventing them from making nominations or submitting changes to their batches of fuel. The Colonial Pipeline has been working to restart since being hacked over a week ago, from which a spate of panic-buying while the pipeline was down had spawned shortages at hundreds of gas stations in a dozen states across the East Coast.In the U.S., oil inventories are expected to have risen last week, according to a Bloomberg survey. If confirmed by U.S. government data on Wednesday, that would be the first weekly increase in three weeks. The industry-funded American Petroleum Institute reports its storage tally later Tuesday ahead of the Energy Information Administration’s figures.More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.