New predictions are mounting up claiming that the currently deadlocked nuclear deal with Iran will eventually be finalized this year, further pushing oil prices down to the joy of oil consuming states and the horror of oil companies who failed to adapt.
Research company Eurasia Group still maintains the odds of negotiations finalizing at 60 percent, despite the fact the July 9th deal deadline has been missed. Researcher Cliff Kupchan strongly believes that a deal could be in place even by next week.
This is because most signs point towards Iranian leader Ali Khamenei acknowledging the fact that it would be in his own political interest to finalize the deal and offer some stability to the country, long embroiled in a verbal and cultural conflict with the West.
At the same time, the six countries negotiating the deal – China, Russia, Great Britain, France, Germany and the United States – are favorable towards finally de-tensioning relations with the country, which remains one of the few enclaves of political stability opposing the Islamic State and other terrorist groups roaming rampant throughout the Middle East.
Finalizing the deal would also bring down oil prices even further, ensuring that they will effectively never have a chance to surpass $65 a barrel in the near future. This rate is hard hitting on states which have oil as their main export and petrol companies, with both expecting to record further losses unless the situation changes.
This boils down to the ongoing war between the Saudi-led Organization of Petroleum Exporting Countries (OPEC) and US drillers, with the former flooding the market with huge quantities of oil in an attempt to drive down prices. While this means losses on their part, it could also force drillers out of business – as current oil prices are insufficient even for covering those costs. If the succeeds, OPEC might benefit from highly increased prices in the future, notwithstanding their undisputed dominance of the market in this scenario.
OPEC would stand to get a substantial boost should the talks reach an agreement, as Tehran would then boost its oil export with about 40 million barrels of oil already stored. This would add an increased oil flow for the next sixth months, which would offer the country enough time to boost its own oil output. Analyst predict that in the 18 months following a succesful Iran nuclear deal, Iranian oil exports would boost the global supply with between 500,000 and 1 million barrels per day.
Image Source: Al Jazeera