If a new nuclear deal between Iran and the U.S. and other Western powers is reached, over a million barrels of oil a day could hit the market, driving oil prices down, according to an industry expert.
In fact, Iran "could supply an initial 1.3 million barrels a day of oil to the market and perhaps even more as they liquidate oil that they've been holding in inventory for all these years," Andy Liptow, president of Lipow Oil Associates, LLC, told FOX Business Thursday.
Still, tensions remain high between the U.S. and Iran after then-President Donald Trump blacklisted the Islamic Revolutionary Guard Corps (IRGC) as a foreign terrorist organization, along with imposing sweeping sanctions on Iran which included its oil sector, after withdrawing the U.S. from Tehran’s 2015 nuclear deal.
John Kerry, now President Biden's climate Czar, was a chief architect of the nuclear deal.
If any deal was greenlighted, Liptow predicts that the oil market would fall by $3 to $5 a barrel.
Since oil accounts for about 50% of what consumers pay for at the pump, the drop in oil price would translate to a 10 to 12-cent drop per gallon in gasoline prices nationwide, Liptow estimated.
Striking a new deal could remove such sanctions which Liptow says would allow Iran to sell "whatever inventory they had" in addition to ramping up production.
Last Thursday, while major world powers continued delicate talks in Vienna to revive Tehran’s landmark nuclear deal, Iran’s supreme leader, Ayatollah Ali Khamenei, vowed that his country would ramp up development of its civilian nuclear program. He urged the importance of nuclear energy for Iran, while again asserting that it had no interest in nuclear weapons.
However, even with the potential drop in oil prices, Liptow says it "actually pales to the increase in prices that we've seen."
Oil prices doubled over the past year, he said, adding that prices "are not going back to $40 a barrel" either.
Rather, they'll remain elevated, between $80 to $90 dollars a barrel, in order "to encourage additional supplies to come on the market."
Consequently, Liptow projects that "higher gasoline prices are here to stay."
Currently, the national average for a gallon of gasoline in the U.S. is just a few cents shy of $4, hovering at about $3.522. Meanwhile, by Thursday afternoon, West Texas Intermediate crude oil was trading at $91.07 a barrel.
The Associated Press contributed to this report.