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The oil drip dropMENA

The oil drip drop

Oil prices came through dripping on Tuesday – and not in a good way. The West Texas Intermediate benchmark fell as much as 1% yesterday as investors pondered what the potential Iran oil deal could mean for the future of the industry. Negotiations between Iran and other countries took place in Vienna, Austria, where the participants tried to reach a consensus on the long-standing issue of Iran’s nuclear program.

If the Joint Comprehensive Plan of Action talks run smoothly, they could result in the US removing its sanctions on crude flows coming from Iran, which were imposed in 2018 and took a huge jab at the country’s oil exports. Iran is now reportedly ramping up its output and exports ahead of the deal. Most recently, the country’s biggest client was China, which was not too fussed about sanctions and took advantage of the lower market prices.

why it matters
This all seems like good news, so why are prices still dropping? That’s because oil markets are still recovering from the impacts of the pandemic, and higher Iranian supply could result in too much supply and therefore lower oil prices (once again).