What Iran's Nuclear Deal Could Mean For Oil Prices

Oil prices fell to record lows on Monday after news that U.S. diplomats and Iranian officials were restarting negotiations to remove the sanctions keeping Iran's oil from the market.

The two sides are nearing the end of a decades long dispute over Iran's nuclear capabilities, the result of which would cut down on Iran's uranium enrichment in exchange for doing away with the sanctions that have strained Iran's economy for years.

Kicking The Market While It's Down

In terms of oil prices, a deal between the U.S. and Iran couldn't come at a worse time. Since the market is already flooded with supply from the U.S. shale boom and Gulf producers, increased production from Iran will only drive prices lower.

Iranian officials have already announced their intention to raise production if the sanctions are lifted, saying plans are already in place to increase crude exports to Asia.

How Much Could Iran Contribute?

The possibility of a nuclear deal has analysts working to determine just how low prices could go. Since no formal agreement has been reached yet, it is unclear how much crude Iran would be able to contribute should the sanctions be lifted.

Related Link: Where Do Oil Prices Stand?

Some are expecting to see an additional 800,000 barrels per day if Iran restarts its oilfields, but the nation is unlikely to be able to sustain that level of production unless it secures additional foreign investment.

Markets Sensitive To Iran News

Investors are watching the nuclear talks closely, and any developments are likely to have a major impact on oil prices. Monday's talks brought WTI prices down to $43 per barrel despite a lack of concrete proof a deal was near.