Brent prices, and to a lesser extent WTI were hit with news that the a "framework" had been reached with Iran today, and a full deal and easing of the sanctions is expected to be reached by sometime in June. Iran supposedly has tankers full of crude ready to go, and about 1 million barrels per day of unused capacity. Since there is plenty of inventory on hand right now, I would think this should start hitting prices across the curve right away, even on oil for delivery before the sanctions are lifted.
The 10 year chart of Iranian production below gives you a sense for about how much supply they are going to be able to add.
From oilprice.com- Can you guess when they ramped up the sanctions?
The chart above from Wikipedia only ends in 2006 but it does show the Iran production during the 1970s.
An Iran deal is also bearish for oil in the longer term. Since there is very little prospect of cooperation between Iran and Saudi Arabia/OPEC, Iran is likely to try to increase capacity and gain market share where it can. Presumably competent service companies and some investment could rapidly raise Iran's output. Iran's conventional oil reserves are 2nd in the world, and total reserves are 4th. There is certainly very significant scope to increase production if it becomes a normal country. Iran produced over 6 million barrels per day before the disruptions of the '79 revolution. This was immediately followed by the Iran-Iraq war of the 1980s, the very low prices of the late 1980s and the 1990s, and finally the international sanctions. In the very long term Iran might also add to the LNG glut, since they have a ton of conventional gas and no pipeline exports. The logical thing from a logistical standpoint would be an export pipeline to Pakistan and even India, though the geopolitics of all that make it seem a rather remote possibility.
Of course there are various parties who want to scuttle this thing on both sides, so it may not be a done deal yet.
The 10 year chart of Iranian production below gives you a sense for about how much supply they are going to be able to add.
From oilprice.com- Can you guess when they ramped up the sanctions?
The chart above from Wikipedia only ends in 2006 but it does show the Iran production during the 1970s.
An Iran deal is also bearish for oil in the longer term. Since there is very little prospect of cooperation between Iran and Saudi Arabia/OPEC, Iran is likely to try to increase capacity and gain market share where it can. Presumably competent service companies and some investment could rapidly raise Iran's output. Iran's conventional oil reserves are 2nd in the world, and total reserves are 4th. There is certainly very significant scope to increase production if it becomes a normal country. Iran produced over 6 million barrels per day before the disruptions of the '79 revolution. This was immediately followed by the Iran-Iraq war of the 1980s, the very low prices of the late 1980s and the 1990s, and finally the international sanctions. In the very long term Iran might also add to the LNG glut, since they have a ton of conventional gas and no pipeline exports. The logical thing from a logistical standpoint would be an export pipeline to Pakistan and even India, though the geopolitics of all that make it seem a rather remote possibility.
Of course there are various parties who want to scuttle this thing on both sides, so it may not be a done deal yet.
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