President Obama’s tentative deal with Iran which is aimed at reining in the country’s nuclear program has serious consequences for both Canada and Russia’s oil exports.
In early trading Tuesday oil prices are down more than a dollar on the news.
Some experts suggest that Iran could increase its oil output by as much as one million barrels a day over the next year into a market that is already producing two million barrels more than the global demand.
“Iran’s efforts to raise oil exports could not have come at a worse time, given the market’s lingering oversupply,” said Michael Cohen, an energy analyst at Barclays.
Disappearing sanctions will provide Iran with an opportunity to modernize its oil infrastructure and create new development projects driving down its cost of production.
“It may take a certain amount of time to become fully equipped with an ability to produce oil at its optimum level,” said Naeem Aslam, chief market analyst at AvaTrade, “but Iran does have a significant amount of oil in their reserve, which is ready to hit the market.”
This is not good news for either Russia or Canada or any of the other big oil producers for that matter.