The U.S., Iran and other nations reached a historic deal Tuesday morning that is intended to restrict Iran’s nuclear program and expected to decrease oil prices.
Following the agreement, the Associated Press reports, President Barack Obama remarked from the White House:
“This deal offers an opportunity to move in a new direction. We should seize it.”
The agreement now goes to the U.S. Congress, Reuters reports. Obama has said he will veto any attempt from Congress to block the deal.
If the deal goes through, Iran stands to gain billions of dollars in the form of relief from international sanctions. The freezing of Iran’s assets has shrunk the Middle Eastern nation’s economy.
In exchange, Iran will agree to curb its nuclear programs,
U.S. gas consumers are among those who stand to benefit from the deal, the AP reports:
Iran is an OPEC member, but its oil production has been affected for years by sanctions over its nuclear program. Any easing of the sanctions could see Iran sell more oil, which could bring down crude prices.
Reuters reports the mere possibility that the Iranian oil supply could return to the market has already helped push down global oil prices. Previously, Iran’s oil exports were reduced by almost two-thirds due to sanctions.
Raymond James energy analyst Pavel Molchanov tells Yahoo News, however, that the Iran deal has little to do with recent oil-price drops:
“We’ve known exactly what the Iranian deal will look like since March 30. We’ve known for the last 90 days that once the deal is in place and once Iranian compliance is certified, the European Union is going to lift the oil embargo and that will enable Iran to increase its oil exports.”
Molchanov estimates the Iran deal could increase Iran’s oil production by 500,000 barrels per day, and other estimates say 1 million barrels per day — “not a game-changer at all for the global oil market,” Molchanov says.
For perspective, the U.S. consumed an average of just over 19 million barrels of petroleum products per day in 2014, according to the U.S. Energy Information Administration.
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