Lifting sanctions on Iran could lower crude price by $10 per barrel, EIA says

Should the current oil sanctions on the Islamic Republic of Iran be lifted then world crude oil prices could be pushed between 5 and 15 dollars lower than would otherwise be the case, a US government agency said.

Not taking the above into account, in its April Short-Term Energy Outlook (STEO) the US Energy Information Administration (EIA) forecast that West Texas crude futures would average $52.48 a barrel in 2015 and $70.0 a barrel in 2016.

The respective values for Brent, the global benchmark for oil, were estimated at $59.32 and $75.03 per barrel.

According to the report, “lifting sanctions could substantially change the STEO forecast for oil supply, demand, and prices by allowing a significantly increased volume of Iranian barrels to enter the market.”

The Middle Eastern country was believed to be holding at least 30m barrels in storage and the US Energy Department’s statistical arm thought the country could ramp up its production of oil by at least 700,000 b/d by the end of 2016 were the sanctions regime now in place to be lifted.

“The pace and magnitude at which those volumes would reach the market would depend on the terms of a final agreement,” the US government agency added.