DUBAI - US and European businesses are already laying the groundwork for expansion into Iran amid growing expectations that economic sanctions against the Middle Eastern country may be lifted.
News reports April 2 that the US and other global powers had reached a preliminary agreement with Iran on the country's nuclear development programme sent a shock wave through the global oil industry.
In New York, crude oil prices fell as much as 4 per cent from the previous day at one point during trading April 2. Iran has the fourth largest confirmed oil reserves in the world. If the economic sanctions are removed, the country will be able to resume full-scale oil export. This would significantly increase oil supply in the international market.
Negotiations over Tehran's nuclear development programme will continue toward the June deadline for a final agreement. If all goes well and Iran cranks up oil production to the levels prior to the sanctions, the country's exports will probably increase by 1 million barrels a day, Bijan Namdar Zanganeh, Iran's oil minister, noted in mid-March.
That much more oil coming on to the market is a nightmare scenario for the US shale oil industry, since it is equivalent to roughly 10 per cent of US oil output.
Read the full article here.