International oil prices may further plunge following the historic deal brokered by the P5+1 (the permanent members of the UN Security Council and Germany), which inhibits the Persian country from building a nuclear bomb, in exchange for lifting of economic sanctions.
Multiple sanctions were imposed on Iran following its 1979 Islamic revolution. In 2006, the UN Security Council passed Resolution 1696 which expanded the scope of the penalties when Tehran refused suspending its uranium enrichment programme. The most crippling of the sanctions was the oil, gas and petrochemical exports.
Now that Iran has got reprieve, it could offload as much as 500,000 barrels of oil per day to the international market. It is estimated that it has 30 million barrels of oil storage that are ready for sale, according to FACTS Global Energy, an industry consultancy.
Auto drivers in the United States (U.S.) are already looking forward to a cheaper gasoline, which currently sells at $2.78. It is expected that by December, “a lot of places are going to see gasoline at $2 or less,” energy analysts in the U.S. predicted.
Iran hasn’t been able to sell oil to the U.S. since 1995. But with the lifting of the sanctions, it could flood the U.S. market with the commodity at cheaper rate.
“Iran will only add to the oil glut on the market and increase the selling pressure,” the CNN quoted Naeem Aslam, chief market analyst at Ava Trade.
Nigeria’s major oil trading partner is India, when the U.S. stopped buying its oil since June 2014. According to the country’s Economic Council Director, Jeffrey Zients, the White House stopped importing oil from Nigeria because “U.S. oil production has ramped up significantly by more than 50 per cent to now over eight and a half million barrels per day. This has dramatically reduced our (U.S.) dependency on imports,” he said.
While many are scared of the consequences of Iran’s nuclear deal on Nigeria’s oil export, Politics and International Relations lecturer at Lead City University Ibadan, Dr Tunde Oseni, said it is still early to assess what it could portend to Nigeria’s diplomatic and economic relevance. But he added that even before Iran’s sanctions were lifted, Nigeria’s oil had been dry, necessitating President Muhammadu Buhari’s trip to the U.S. where he hopes to appeal to the country to resume buying Nigeria’s oil.
