Iran is facing a crucial deadline on nuclear talks which could see the country’s economic sanctions being lifted especially by the P5+1 powers.
P5+1 powers comprise of the US, Britain, Russia, France, China and Germany. The countries want to safeguard their populations from a threat of Iran nuclear weapons.
These countries want severe assessments and written assurances, ensuing in punitive consequences if Iran does not adhere to its side of the deal.
Talks on a comprehensive nuclear deal have been extended to July 7.
Iran is calling for an end to economic sanctions that have crippled its economy.
Michel Karera, head of commodities for Africa, Thompson Reuters said, for Iran it is significant as they have been facing serious sanctions for the last 12 years in all sectors with oil being the most dominant industry in the country.
“[If sanctions are lifted], Iran will have the ability to market its massive crude oil stock they currently have which could make the whole process a serious problem to the global oil producers,” said Karera.
Karera added that if Iran is allowed to re-join the international community, the world will have extra crude oil coming into the market with an additional excess that will have an impact on the oil price.
“The drop in oil price would be a welcome development for oil consuming economies like South Africa while producers will be immensely hurt,” he added.
“The drop in oil price is positive when you are a consumer and negative when you are a producer like Angola and Nigeria. It will however take time for Iran to reach its previous peak.”
Karera also said there were fears that the entire global economy might slow down due to the impending Greece default which could also impact on the oil sector as there would be less demand for oil.
“The scale of Greece’s economy is very small to impact any global markets. The only thing that might worry markets is that Germany, France and Spanish Banks might be contaminated,” said Karera.
“In the long term I don’t see the Greece issue being a serious problem for the oil market."