New Nuclear Deal with Iran Will not Make Imminent Impact on Oil Markets

A new agreement on the Iran nuclear deal is expected to see the sanctions on the country’s oil sector being lifted, but it could still take several months for Iranian crude exports to start flowing. And even if everything goes according to plan, it may only offer a short term ease to tight oil markets.

Oil prices soared to $120 a barrel for the first time in a decade last week as the West continued to impose sanctions on Russia. The prices dropped near the week’s end amid hopes that the nuclear deal with Iran is close.

The talks on the nuclear deal appeared to get close to a conclusion last Friday, with hopes of an imminent ministerial meeting.

However, even if a deal is struck this week, it could take several months before Iran could restart exporting its oil due to pending confirmation of Iran’s compliance with the deal. Therefore, an additional Iranian oil in the global market is not expected before May or June.

When Iran nuclear deal was first signed in 2015, sanctions could be fully lifted six months later, once Iran’s nuclear related measures were verified by the U.N.

Moreover, most refiners around the world need to make technical arrangements to reintroduce Iranian oil into the mix.

If and when Iran’s compliance is confirmed, however, the markets will not need to wait for extraction from oil fields as Iran could release crude from storage and help ease some of the pressure from oil prices.

Iran, which has the world’s fourth-largest oil reserves, is largely dependent on oil revenues for its economic well being. The country’s oil exports had reached as much as 2.8 million bpd in 2018 until the U.S. withdrew from the nuclear agreement and reimposed sanctions, plummeting them to as low as 200,000 bpd.

Need to access the insight?

Start your 7-day free trial now

Need to access the insight?

Start your 7-day free trial now

Need to access the insight?

Start your 7-day free trial now

Do you need to access special insights on this matter?

Start your 7-day free trial  and become a member today

Subscribe to Top Insights Today

Subscribe to Executive Newsletter Top Insights Today

The Executive Newsletter -Top Insights Today- puts global business events in perspective through special insights

Join the ranks of global executives and subscribe to Top Insights Today

Top Insights Today covers insights on energy, clean-tech, oil&gas, mining, rare earths, defense, aviation, infrastructure, manufacturing, electrical vehicles, big-tech, finance and politics of business

By clicking subscribe you agree to our privacy and cookie policy and terms and conditions of use.

Read more insights

European Automakers Bet on Northvolt for EV Batteries

Swedish electric vehicle (EV) battery producer Northvolt sets out plan to expand its laboratory facility in Sweden. The company is aiming a $750 million investment to meet rising demand for lithium-ion batteries for EVs. Northvolt aims to compete with major Asian manufacturers CATL and LG Chem to ease carmakers’ dependency on Chinese producers, which own 80% of global battery production. 

Nationalization May Not Fix EDF’s Pressing Problems

The French government has announced it would fully nationalize EDF, the utility that runs the nation’s nuclear plants, which has been struggling with debt. The government has so far failed to restructure the company. The government has not yet revealed if it would buy out the minority shareholders or take control by law, but however it is nationalized, there is no guarantee it would fix EDF’s debt or its corroding reactors. More importantly, the move seems unlikely to reduce the cost of protecting consumers from skyrocketing energy prices. 

High Nitrogen Fertilizer Prices Risk Spring Planting Season

A global shortage of nitrogen fertilizer is causing the prices to soar to record levels, and many farmers have decided to delay purchases until spring, raising the danger of a spring scramble to apply the nutrient before planting season. Farmers apply nitrogen fertilizer to corn, canola and wheat to boost yields. Higher fertilizer costs could cause higher prices in meat and bread. 

Stay informed

error: This content is protected !!