Oil prices fell sharply on Thursday following remarks by US President Donald Trump suggesting a nuclear deal with Iran may be near, but analysts say any boost to global oil supply would likely belimited, according to a Bloomberg analysis.
Speaking in Qatar, Trump said “we’re getting close to maybe doing a deal” with Tehran. Brent crude dropped as much as 4% on the news, amid reports that an agreement could ease sanctions and increase Iranian oil exports.
However, analysts quoted by Bloomber said that Iran has limited spare capacity—estimated between 300,000 and 400,000 barrels per day—equivalent to about 0.3%–0.4% of global demand.
“Let’s just assume all sanctions were going to be lifted, the actual volume coming back to the market is not going to be that much,” said Amrita Sen of Energy Aspects.
Iran’s output was 3.4 million barrels a day in April, with capacity capped around 3.8 million, according to the International Energy Agency. The IEA also said that global inventories are set to rise, signaling an oversupplied market regardless of Iranian flows.
While much of Iran’s crude is already reaching markets through shadow fleets, tighter US sanctions could push exports below 1 million barrels per day, Bloomberg added.
