VIENNA—Brent and WTI crude prices dropped July 14 as six world powers, led by the U.S., and Iran reached a long-sought-after agreement on the Middle Eastern country’s nuclear program.
The deal, will place restrictions on Iran’s nuclear capabilities in exchange for the rolling back of economic sanctions that have severely limited the oil-rich country’s ability to market its crude to countries worldwide. Iran holds the fourth-largest oil reserves in the world, and its return to the fold will undoubtedly add further uncertainty to what has been a turbulent 12 months for oil.
Though West Texas oil prices had stabilized at approximately $60 per barrel after hitting depths of nearly $40 amid fears of a supply glut earlier this year, the Greek debt crisis drove prices down sharply last week. With the latest news out negotiations in Vienna, prices inched downward toward $50.
Low oil prices have already severely stung Canadian energy companies, stalling capital expenses, leading to worker layoffs and putting the viability of some high-cost production sites at risk. Iranian oil reentering the market is certain to raise further concerns about production from the oilsands to off-shore Atlantic oil sites.
Though the deal, which is already being hailed as one of the greatest political victories in recent years, will not need direct congressional approval, congress could act to stop the deal. There are already calls for it do so – most notably from Israeli Prime Minster Benjamin Netanyahu. President Barack Obama vowed to veto any legislation aimed at blocking the historic deal.