A nuclear deal between Iran and six world powers raises the specter of a fresh oil glut further pressuring prices, but any selloff depends on how successfully Tehran can increase production and sell crude in the face of competition.
The possibility of up to a million new barrels of Iranian oil flooding global markets, the amount Iranian officials aim to deliver within months, comes at a critical time. China’s stock-market turmoil in recent weeks could slow an economy that was expected to account for a lot of energy-demand growth.
Meanwhile, U.S. production remains strong, and countries such as Iraq and Saudi Arabia are pumping record amounts.
On any given day, the world already produced more than two million barrels a day more than there is demand for, according to the International Energy Agency, which monitors oil-and-gas data for industrialized nations.
After recovering somewhat from a 60% drop this year, global benchmark Brent crude has lost 15% since early May. On Tuesday, Brent reversed early losses and was up 0.9%, to $58.67 a barrel, on ICE Futures Europe.