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.”