Brent crude oil prices fell 2.6 percent Tuesday as Iran and the P5+1 group reached a final nuclear deal that will see the removal of the sanctions on Tehran.
The price of the global benchmark decreased to as low as $56.76 per barrel, after it opened at $58.28 per barrel on Tuesday, according to official data.
A lifting of sanctions on Iran means the country will be able to increase its oil exports, which would raise the glut in global oil supply and create downward pressure on prices.
In addition, Iran is planning to increase its oil production by attracting foreign investment into its oil sector.
On April 20, Iran's Oil Minister Bijan Zangeneh said the Organization of the Petroleum Exporting Countries (OPEC) should make room for Iran's oil production, underlining that his country wants its crude oil exports to return to pre-sanctions level.
Although Iran cannot increase its oil production or exports immediately, this nevertheless creates expectations in the oil market that crude oversupply will rise globally.
"Any positive outcome of the deal will have an immediate downward effect on the prices, even before any actual Iranian production rises," a report by SVB Energy International LLC, a global energy consulting firm, claims.
While Iran's oil production was 3.6 million barrels per day before sanctions were imposed, this amount fell as low as 2.6 million barrels a day in 2013. Iran produced 3.1 million barrels a day on average in April and exported around 1.2 million barrels from this amount per day on average.
Iran is estimated to have around 36-37 million barrels of stored liquids, oil and condensate, in floating storages that could be released immediately to the global oil market once sanctions are lifted.
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