Oil Volatile After Iran Deal

The oil market experienced turbulence on Tuesday after Iran and global powers reached an historic deal that would remove sanctions in exchange for curbs on Tehran’s nuclear program.

Sanctions have long restricted Iran’s oil production and exports, and the country is eager to regain its status as a global energy power.

Crude prices initially fell by as much as 2.3% to $50.98 a barrel as investors reacted to the freshly-inked deal. However, oil bounced off those levels as investors weigh the details of the agreement and whether or not it will overcome deep skepticism in Congress. Oil was recently trading up 0.2% to $52.31.

Experts have warned that the deal could lead to a flood of new oil supply from Iran — the country has 30 million of barrels of crude in storage and ready for sale, according to FACTS Global Energy, an industry consultancy.

“Tehran has made clear its intention to lift exports as soon as the ink dries on an accord,” the International Energy Agency wrote in a July 10 report, before the deal was struck. “The bottom of the market may still be ahead.”

via CNN

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza