Market anticipates surge in exports from major Middle East producer
Crude prices tumbled on the morning of 14 July after it emerged that Iran and world powers have signed a comprehensive nuclear deal that could trigger a surge in exports from the Middle East country.
At 9.00 GMT, the Brent price was trading down 1.7 per cent at $56.86 a barrel with the announcement of the deal due later in the day.
International sanctions against Iran have caused Iranian oil exports to drop significantly ever the last three years but the comprehensive deal will allow Tehran to ramp up production and increase exports, especially into European markets.
Renaissance Capital forecast this week that Iranian oil production will rebound by 750,000 barrels a day (b/d) to 4.4 million b/d in 2016. Together with the 19 million barrels already stored, this could increase Iranian exports to 2.4 million b/d next year from 1.6 million b/d in 2015.
This increase in exports will put further pressure on an already-oversupplied crude market.
The Brent crude price dropped below $60 a barrel for the first time in three months during the first week of July amid fears that fallout from the Greek debt crisis and sharp falls on the Chinese stock market could weaken global demand.
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