The price of Brent oil futures, the benchmark, fell from $18.40 a barrel to $17.92 within 15 minutes and later declined further to a low of $17.85.
Staffan de Mistura, the UN's representative in Baghdad, said the text of the agreement needed to be finalised. "We believe the process will be concluded by next Monday," he said.
When Iraqi sales resume, it will mark the country's first exports since the end of the Gulf War.
A statement from the IPE said: "As soon as the news was announced Brent prices began to spiral downwards." It said the volume of trade rose to more than double the recent average daily trading volume.
The oil price was further depressed by confirmation from the German Economics Ministry that it would start selling 50 million barrels from the country's oil reserves beginning on 4 August.
Germany planned to raise around DM400m (pounds 133m) this year and a further DM500m in 1998 from oil sales, a ministry spokeswoman said. The government announced last week it would sell reserves to try to reduce its budget deficit enough to qualify for the single European currency.Reuse content