By the end of this week (Friday 20th March) there is a chance that a deal over Iran’s nuclear development may be agreed with the West. To recap, in mid-2012 sanctions were imposed against Iran’s oil exports, precipitating a drop from 2.5 million barrels per day to close to 1.4 million per day – the lowest since 1986. Any deal may allow the removal of sanctions on Iran’s oil exports, the impact on the oil price however will depend on the detail.
What are the chances of a deal being done? Many commentators have pointed to low oil prices and the impact it has had on the Iranian economy as increasing the likelihood of a deal. To put this in perspective, the 26-year reign of Iran’s Supreme Leader has seen oil prices range from as high as $147 per barrel to as low as $10 per barrel – and there’s never been much of a correlation between oil price and his behaviour. Despite this a confluence of political factors could make a deal more likely now than ever.