Oil prices to remain under pressure in near term

The renewed pessimism in the crude oil market, which recorded the biggest monthly drop in seven years, was triggered largely by the P5+1 nuclear deal with Iran in early July, as well as ongoing over-quota production from OPEC as a whole, still-elevated U.S. output, and concerns surrounding economic activity in China. 

"Under the nuclear agreement, the long-held sanctions against Iran will be lifted, allowing the country back into the global oil market. It will take time before the agreement is implemented, suggesting that Iranian oil supply should not ramp up meaningfully before mid-2016", says Economics TD. 

It is estimated that the country has about 30 million barrels of oil in storage that could come to market quickly; however, given the sanction-induced lack of investment in the industry over the past couple of decades, it will take much longer for production to rise to potential levels. 

"Given the still-growing glut, oil prices will remain under pressure in the near term, unlikely to get back above the US$60 per barrel mark until 2016", added Economics TD.