Reuters, 12 July 2015
Despite the deep skepticism in the air, nuclear talks with Iran only seem deadlocked—analysts are still setting the odds in favor of a deal between 60% and 70%. Back in January, we predicted such a deal would be struck this year; while no one can say precisely when it will be concluded, the expectation is in the coming several weeks, and possibly the next few days.
If the betting is right, among the losers will be petro-rulers and oil companies that haven’t seriously trimmed expenses. Among the winners: oil-consuming states and motorists everywhere, whose dollars will continue to stretch further as oil prices are pushed down.

This is going to mean lower oil prices
Such a scenario will mean another sorry year for those whose wherewithal relies on high oil prices. If geopolitics remain more or less at today’s level of mayhem, oil prices will struggle to rise above the band we’ve seen—$55 to $65 a barrel, far below the cost of running most petro-states and oil companies.
This is because of a vicious circle that’s formed between the Organization of Petroleum Exporting Countries (OPEC) and upstart US shale drillers. Since last fall, Saudi-led OPEC has been flooding the market with oil in an attempt to drive down prices, and force shale drillers out of a business that the cartel wants for itself.
Instead, the number of drilling rigs on the US shale patch rose for the second straight week last week after 29 prior weeks of decline. And while overall number of working rigs has fallen in North Dakota’s Bakken basin, the favored target of shale mockers, production there surged in May thanks to more efficient technology, according to a new report. For seven straight weeks, the US has produced 9.6 million barrels of oil a day, its highest rate since the early 1970s.
This US persistence has forced OPEC to continue its elevated drilling. The OPEC countries are producing 31.7 million barrels a day, according to the International Energy Agency (IEA). So even next year, when US shale production will be flat and not grow or shrink, OPEC drilling will keep the world in surplus, the IEA suggests. If OPEC reduces its production, prices will go back up, which will incentivize US shale drillers to go back to work.
On top of that will be new Iranian production
And that’s not all. As soon as the US Congress and Iranian leadership approve a nuclear deal reached in Vienna, Tehran could almost immediately begin to sell the 30-40 million barrels of oil stored in vessels floating off its shores at the moment. At a rate of, say, 200,000 barrels a day, the added flow can last almost six months. That would be right about the time that Iran will start to boost production from existing fields.
All in all, analysts say a reasonable estimate is that Iran will add between 500,000 and 1 million barrels a day to global supply over the next 18 months. Even if shale doubters are right, this oil will maintain OPEC’s current nightmare.