After 18 days of intense and often fractious negotiation, diplomats on Tuesday declared that world powers and Iran had struck a landmark deal to curb Iran’s nuclear program in exchange for billions of dollars in relief from international sanctions Time
Brent crude and West Texas Intermediate, or WTI, oil futures both fell about 2% as the deal was announced on Tuesday. Oil prices also fell in the prior session.
Brent crude is an international oil benchmark that reflects global prices, and any related turmoil, whereas WTI is focused on the North American market.
WTI cut some of its early losses and was trading down 1.2% at $51.58 a barrel.
Iran has the world’s fourth-largest oil reserves with about 157,530 million barrels, or 10% of the world’s proven oil stores, according to the Organization of the Petroleum Exporting Countries, or OPEC, of which it is a member.
But Tehran’s ability to export those reserves was severely curtailed by crippling international sanctions that bludgeoned its economy and targeted its industries.
Iran’s oil exports have fallen in half since 2012 to about 1 million barrels a day. Its oil will now reach world markets at a time when crude prices have been under pressure for months due to a global supply glut.
Sara Vakhshouri, Washington-based energy analyst at SVB Energy International, said that with Iran’s sanctions lifted it would be able to boost its oil production from 2.9 million barrels a day to 4.2 million barrels a day by 2020.
Iran’s oil production is worth about $60 billion a year on the world market.
Oil prices can also be expected to drop, Vakhshouri said, because Iran has as much as 37 million barrels of crude in storage on tankers floating in the Persian Gulf.