Summary: Here Stratfor discusses one of the big economic and geopolitical questions about the Iran deal, much more important the deal’s effect on Iran’s conjectural nuclear program (30 years of a nuke coming really soon). Low prices have depressed the economies of key nations such as Russia and the Gulf States (plus oil-producing areas of the US). If new oil from southern Iraq and Iran depresses oil prices even more we might see some shocks of a kind unimaginable in the heady days of $100 oil.
How the Iran Deal Will Affect Oil Markets in the Short Term
Stratfor, 16 July 2015
The nuclear agreement between Iran and six world powers will naturally have consequences for global oil markets as Iran, the world’s third-largest oil producer before the Iranian Revolution, eventually exports more oil. Prior to the implementation of sanctions in 2012, Iran was a major crude oil and condensate exporter to Asia, Europe and others — in fact, exports totaled 2.6 million barrels per day in 2011. Today, that figure has fallen by almost 600,000 bpd to Europe and another 600,000 bpd to Asia. Iranian exports now hover closer to 1.4 million bpd, 1 million bpd of which is crude oil.
The July 14 deal paves the way for sanctions to be relaxed by early 2016, enabling anyone to buy oil from Iran. While Iran maintains that it can increase oil production by 500,000 to 600,000 bpd within one month of the removal of sanctions and increase exports to 2.5 million bpd within three months, Stratfor sees these figures as overly optimistic. Iran does, however, have at least 35 million barrels of crude oil and condensate in storage that it could use to increase exports in the interim before its oil production rises again. 2016, consequently, will likely be another year where a healthy oil supply tamps down any oil price recovery.