Oil Prices to Plummet Following the Iran Nuclear Deal

By Alyssa Potenzone,
Money and Investing Writer

oil prices

A deal to delay development of nuclear weapons in Iran was decided upon after much time, debate, and discussion.

On April 2, 2015, the United States, along with the United Kingdom, France, China, Russia, and Germany collaboratively agreed to a plan that will ensure nuclear weapons stay out of the hands of Iran.

The Iran Nuclear Deal increases the time it would take to make a bomb, reduces the amount of fissile material, reduces the number of centrifuges, and inspects Iran’s activity regularly.

In return for cooperating and adhering to the deal Iran will be relieved of all United States economic sanctions.

The use of uranium or plutonium is essential in the construction of a nuclear bomb.

The deal cuts off Iran’s access to uranium from the Fordow and Natanz facilities, the country’s two uranium enrichment facilities.

Additionally, any attempt to produce weapons-grade plutonium or fissile materials is strictly prohibited.

Quantitatively, the deal reduces Iran’s current quantity of uranium by 98 percent, reduces the number of centrifuges available for the next ten years from 20,000 to 6,104 and requires that those 6,104 centrifuges be the oldest models.

International inspector’s routine inspections of fissile material manufacturing and transportation will prevent the chances of a secret location for the construction of a bomb to go unnoticed.

What if Iran does not adhere?

In the case Iran violates this deal the United States and other United Nation countries will place all prior economically crippling sanctions back on Iran.

While Hassan Rouhani, the President of Iran, is joyed to have relieved his people of sanctions, energy producers are angered.

Iran having one of the world’s largest oil and gas reserves is heavily affected by the lifting of sanctions as it floods additional supply into an already adequately supplied market.

Price per barrel fell ever slightly as Iran began exporting oil into the market again, but rose soon after as it became evident that it would take time for Iran to restore its 43 percent share in the market prior to the sanctions.

Experts realize that Iran does not have significant supply of crude oil to immediately throw into the market.

Being that Iran has not exported oil to the United States since 1995, it will take time and “the process will be far more gradual than people [are expecting],” Neil Atkinson, head analyst at Lloyd’s List Intelligence said.

Iran needs to invest in the infrastructure to reestablish production of crude oil.

Analysts predict that come 2016 prices will drop again once Iran begins supplying more oil to an already saturated market.

Iran’s entrance into the market in combination with Organization of the Petroleum Exporting Countries’ (OPEC) increase in supply to obtain a larger market share will further push prices down.

Tom Kloza, chief oil analyst with the Oil Price Information Service suggests, “by December a lot of places are going to see gasoline at $2 or less.”

A version of this article appeared in the Tuesday, September 22nd print edition.

Contact Alyssa at
alyssa.potenzone@student.shu.edu

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