ran could flood the market with its crude stockpiles if it reaches a deal on its nuclear program, but its output would slow after the initial release, analyst Matt Smith said Tuesday.
Negotiators from Iran and six world powers are working to reach a Tuesday deadline on the country’s nuclear program. Crude futures first broke through their two-month trading range last week after an Iranian diplomat said technical experts had completed the draft of a deal.
That set off a nearly 8 percent slide in oil prices Monday, erasing much of the year’s gains.
With the market already oversupplied with 1.5 million to 2 million barrels a day, any sign of movement toward a nuclear deal will be bearish for oil markets, said Smith, director of commodity research at Clipper Data. Iran could release as much as 40 million barrels of oil currently sitting in floating storage into the market, he told CNBC’s “Squawk Box.”
However, once it releases that stockpile, Iran will go through a gradual process of returning about 200,000 barrels per day back into the market, he said “Even in a year’s time we may not see the return to presanction levels of [about] 3.6 million barrels per day.”