Iran reaches historic deal with world powers

Deal could result in the phased lifting of sanctions

Oil prices fell following the deal between Iran and the West.
Oil prices fell following the deal between Iran and the West.

Iran reached a historic deal with the West over its nuclear porgramme, which could result in the phased lifting of sanctions on its crude oil exports.

The OPEC member and the P5+1 nations (US, UK, France, Russia, China and Germany) struck an initial agreement on Tuesday after a 14-year distandoff.

Under the deal, sanctions imposed by the United States, European Union and United Nations would be lifted in exchange for curbs on Iran's nuclear programme.

The Islamic Republic can be required to provide the International Atomic Energy Agency (IAEA) with access to suspected nuclear sites, including military sites, within 24 days, accoridng to one provision of the accord.

A so called "snapback" mechanism was also agreed, under which some sanctions could be reinstated in 65 days in the case of violations.

Oil prices fell by more than $1 a barrel following the deal. Brent crude fell $1.15 to $56.70 a barrel, while US crude fell $1.05 to $51.15.

Meanwhile, experts warned that Iran's return to the oil and gas market and the eventual increase in its exports will add to the existing oversupply. However, it may take at least five years for Iran to revive its oil and gas sector and put its crude back on the international markets.

"New oil will not flow from Iran until 2016 and there will probably be less of it than optimists predict," Richard Nephew, program director for Economic Statecraft, Sanctions and Energy Markets at the US Center on Global Energy Policy, was quoted by Reuters as saying.

"I estimate 300,000–500,000 new barrels of oil on the market within 6-12 months after a deal begins to be implemented," he said.

Iran's daily exports averaged $3mn barrels of oil in the pre-sanctions era.

To read more on Iran's story, click here.

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