Oil prices rose on Wednesday as investors recognised it would take time for Iran to ramp up oil exports after its nuclear deal with six world powers, although an ongoing global crude glut kept a lid on gains. Under the nuclear deal reached on Tuesday, sanctions imposed by the United States, the European Union and the United Nations are to be lifted in exchange for curbs on Iran’s nuclear programme. While oil prices initially fell on the news, they recovered later as it became apparent the deal would not immediately lead to a flood of new supply.
Brent crude was up 27 cents at $58.78 a barrel by 0529 GMT. U.S. futures were up 18 cents at $53.22. “New oil will not flow from Iran until 2016 and there will probably be less of it than optimists predict,” said Richard Nephew, Program Director for Economic Statecraft, Sanctions and Energy Markets at the U.S. Center on Global Energy Policy.
“I estimate 300,000–500,000 new barrels of oil on the market within 6-12 months after a deal begins to be implemented.” Morgan Stanley said most assessments saw 500,000-700,000 barrels per day (bpd) of new supply by the first half of 2016.