The recent deal between Iran and the West means that it is now very likely that substantial volumes of oil from Iran will return to the market. If the deal is signed at the end of June, experts think that it would be at least six months, and probably longer, before Iran would be able to comply with its side of the agreement and for sanctions to be lifted.
Once sanctions have been lifted, the Iranian authorities assert that the country could double exports within two months. This would be an increase of over 1m bpd to an already oversupplied market. The return of Iranian exports may actually reinforce OPEC's no output cuts stance.
"We doubt that Saudi Arabia is going to cut its oil production to make room for Iran. Therefore, if and when Iranian oil exports begin to come back to the market they should put significant downward pressure on prices. Indeed, this is one reason why we expect the price of a barrel of Brent to only be $60 by the end of this year." - said Capital Economics in a report
