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Iranian Oil Will Add to Global Glut

by Elizabeth Alford on January 20, 2016

Last week, the Obama Administration entered into an historic and controversial nuclear deal with Iran that includes lifting economic sanctions. What will this mean to U.S. oil and gas interests?

Related: Congress Ends Oil Export Ban

Since 1979, the international community has imposed economic sanctions on Iran, which has prevented the country from sending its vast amount of oil out into the market.

The International Energy Agency says that Iran has about 38 million barrels of oil in reserve that can enter the market quickly at a rate of 400,000 to 500,000 barrels a day. The agency warned that “… unless something changes, the oil market could drown in oversupply.”

The recent slide in crude prices to below $30 may be a reaction to the anticipated deluge of oil from Iran and there are predictions of barrels going for $20 soon. But now everyone believes that the Iranian oil will affect prices.

One analyst from Seeking Alpha predicts “In the case of Iran bringing more oil to market, it’s going to happen, and even if it takes a little longer than the market believes at this time, it won’t have an impact on the price of oil; although it could give it a temporary boost if it is found the export time frame isn’t a near as supposed.”

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