Oil prices tumbled on Monday as Iran and six world powers were close to nailing down a nuclear deal and European leaders failed to agree a Greek bailout, taking the euro zone's debt crisis into another week.

The possibility of Iran adding to a global oil surplus when the demand outlook could potentially weaken given a slump in China's equity markets and the impasse over Greek debt, led several analysts to say that crude would fall further.

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 programme.

US West Texas Intermediate (WTI) crude prices were down $1.10 a barrel to $51.64 a barrel at 0647 GMT.

Brent crude fell around 2.5 per cent, or $1.51 to $57.21 a barrel, on the expectation that a deal with Iran would lead to an easing of sanctions against Tehran and higher crude exports.

"An Iran nuclear deal is planned for Monday, which is not yet in our base case forecast," Morgan Stanley said.

"If true and successful, US production growth may not be needed until 2017, keeping 12-18 months deferred WTI prices under $70/barrel. Similarly, under such a scenario, Brent could remain range bound below $70/barrel through 2016," the bank said.

Although analysts said it would take until 2016 before Iran would be able to return to full-scale exports, most estimate that a jump of around 200,000 barrels per day in exports could be seen in the short term, adding to a current surplus of about 2.6 million barrels a day.

Chinese customs data on Monday showed the country's crude imports in the first half of the year rose 7.5 per cent from a year ago, but that failed to support prices because the increase was more due to stockpiling of strategic reserves than a real rise in demand, according to analysts.

"China's oil import volumes recovered ... The stronger import numbers were a result of the completion of various refinery maintenance programs in May. However, the completion in construction of various new storage facilities in China may also have supported imports," ANZ bank said.

In Europe, the Greek debt crisis continued as political leaders argued into Monday at an emergency summit, so far without result.

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 3Q15".

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