Ashita Hiregoudar

BE Petroleum
17 November y

The Iran Nuclear Deal

Will it drop a bomb on the current prices?

The already tense situation needn't be explained; the oil prices are
more or less trying to stabilise, the worlds production still a surplus as of
today, and people are getting sacked in our industry by the minute.
Petroleum engineers at large are checking the oil prices like stock prices ,
nervously biting their nails as the prices do their dance of fate. When
things couldn't have gotten worse, it appears to have. The Iran nuclear
deal is a new development whose implications are yet to unfold. As most
have predicted this to be a bane to our industry, some beg to differ. So
lets get to the details without further delay !
The Iran Nuclear Deal, which is officially called the Joint
Comprehensive Plan of Action, was an international agreement signed
between Iran and a group of the most powerful nations, namely USA, UK,
France, Germany, China and Russia(all of them being the permanent
members of the UN Security Council, save Germany), on the 14th of July,
2015 in Vienna. The deal has terms which specified the extent of nuclear
development in Iran. A few key points were that Iran had to give up twothirds of its ability to enrich uranium, and decommission most of its
centrifuges. It also has been demanded to export all but 300 kg of its
entire stockpile of low enriched uranium. These are some of the 15 year
aspects and the agreement also specifies terms after this 15 year tenure.
To summarise this in more understandable terms, the agreement is
basically drafted to keep a check on Irans nuclear capacity, and prevent it
from becoming a future threat, due to its past ties to terrorism. At the
same time, it does encourage Iran to do research and development in the

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same, but with strict surveillance by the International Atomic Energy

Association(IAEA). The non agreement to this deal would keep Iran in a
vegetative state of sorts; In 2012, there were sanctions placed on Iran by
the UN preventing them from trading and obtaining material that could be
used to make a nuclear bomb. The sanctions also banned other countries
from buying oil from Iran, leading them to lose their currency value by
almost two third, and their GDP falling by 32%.
Now the outcome of this is bound to have some effect on the oil
industry. This is because the agreement of Iran to this deal enabled them
to melt frozen assets, allow it to participate with trade in the world and
allow it to sell oil to the world market, from which it was barred before.
With Iran now being another contender to sell its oil (which it is has no
shortage of, having the 4th largest reserves in the world) it is bound to
increase the oil available in the market, which as mentioned earlier is
already superfluous. For this reason, most believe that the oil prices are
going to further plummet, and we wont be able to see daylight till at least
2021!
But another aspect to this is that with Iran being compromised for so
long, it is going to take a good year or two for her to accustomize and
start producing oil. Initially it is expected to produce a meagre amount of
oil, with its share percent such as to not affect the oil prices drastically.
This gives a brief period to catch our breath and somehow find a solution
to the impending storm when Iran produces full force.

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