Oil prices fell on Wednesday as investors digested the likely impact of increasing Iranian fuel exports at a time of heavy oversupply.
A milestone nuclear deal reached on Tuesday between six world powers and Iran will mean sanctions that have limited sales of Iranian oil for several years are likely to be lifted in early 2016.
An official at the National Iranian Oil Company said on Wednesday that Iran’s oil production could increase by 500,000-600,000 barrels per day (bpd), confirming the prospect of a ramp-up in supply from a nation that holds some of the world’s largest oil reserves.
Iran could reach its pre-sanctions level of 4 million bpd within six to 12 months if there is enough demand, he said.
Most analysts agree that first Iranian oil exports could enter the global market in early 2016, but their estimated additional volumes vary between 300,000 and 700,000 bpd.
Iran, a member of the Organization of the Petroleum Exporting Countries, exported almost 3 million bpd of crude at its peak before Western sanctions reduced shipments to about a million bpd over the past two and a half years.