If Iran Agrees to Nuclear Deal that Allows the US Lift Sanctions, Lower Gas Prices Could Result

By Yehudit Garmaise

If Iran agrees to stop its efforts to create an atomic bomb, gas prices could drop worldwide.

International diplomatic talks will resume in Vienna today that could result in Iran agreeing to stop proliferating its nuclear power, which would allow the U.S. and the international community to lift sanctions that have prevented the country from exporting more oil.

Since April, eight rounds of diplomatic meetings between representatives of Tehran and Washington have not yet created an agreement over how to resume the 2015 nuclear pact, as representatives from Iran fail to agree to stop building up its nukes. 

A successful deal Tuesday could result in the return to the market of more than 1 million barrels per day  of Iranian oil, which comprises more than 1% of the global oil supply.

“If sanctions against Iran are lifted, global crude oil supply may receive much-needed support," Naeem Aslam, a chief market analyst at AvaTrade, a stock brokerage firm whose headquarters are in Dublin, Ireland, told Reuters.

The financial markets reflected optimism about the diplomatic talks on Tuesday, when the price of oil dropped from $95 to $91 a barrel.

Global demand for oil remains high as pandemic-weary people worldwide itch to get out and travel. While crude oil was priced at $70 per barrel in January 2020, as the pandemic forced people into quarantine and lockdowns, gas consumption was so low that the price of oil per barrel plunged to $0: for the first time ever, according to the US Energy Information Administration. 

Oil prices also decreased on Tuesday after French President Emmanuel Macron said his meeting with Russian President Vladimir Putin had helped to prevent what could be his invasion of Ukraine.

Russia is the world’s second-largest producer and exporter of petroleum, and therefore, has considerable influence and control in the international oil market, although the country is not a member the Organization of the Petroleum Exporting Countries (OPEC), which is a cartel 13 countries that controls oil prices.

Photo by: Flickr