Crude up slightly after Iran and West reach nuclear accord

HOUSTON – Crude prices initially slipped and then inched upward Tuesday as Iran reached a deal with the United States and five other nations to restrict its nuclear capabilities and lift international sanctions on its oil exports.

Analysts believe Iran may be able to put hundreds of thousands to a million barrels of crude a day back onto the bloated global oil market over several months to more than a year once international sanctions are lifted.

But that won’t happen until at least Dec. 15, when international nuclear inspectors make a report to the United Nations on Iran’s compliance with measures in the accord meant to curb the Islamic Republic’s nuclear program.

“The upshot of this is there’s highly unlikely to be any Iranian barrels in 2015,” said Neil Atkinson, an analyst at Lloyd’s List Intelligence in London. “That’s why prices haven’t fallen off the table.”

U.S. crude edged up 16 cents in early trading Tuesday to $52.36 a barrel on the New York Mercantile Exchange, though in overnight trading it had dropped as low as $1.25, or 2.3 percent, below $51, when the deal was first reported. Brent, the international standard, was down 25 cents to $57.60 a barrel early Tuesday.

The long-awaited nuclear accord, which came after more than two weeks of negotiations in Vienna, requires Iran to reduce its stockpile of uranium by 98 percent and keep its uranium enrichment well below levels needed to make a nuclear bomb.

Iran won’t see any breaks from international sanctions until it has let the International Atomic Energy Agency confirm it has lived up to the deal, the U.S. Secretary of State’s office said in an announcement.

“No new U.S. or international sanctions are being relieved today,” U.S. Treasury Secretary Jacob Lew said in a written statement.

“When Iran does what it needs to do, we will provide timely guidance to governments an businesses worldwide to clearly explain the changes to U.S. sanctions on Iran.”

But the United States and the European Union can put sanctions back on the Islamic Republic if inspectors discover it is cheating.

It’s likely once sanctions are lifted Iran could put 300,000 to 500,000 barrels of oil a day on the market over time, alongside 30 million to 40 million barrels it has stored on offshore vessels, said FBR analyst Ben Salisbury in a note to clients.

Another 250,000 barrels a day of oil on the market “pales in comparison” to the 1.5 million barrels of oil the Organization of Petroleum Exporting Countries has already added to the oversupplied market this year, but it could push an oil-industry recovery out by three months, analysts at Tudor, Pickering, Holt, & Co. wrote in a note to clients Tuesday.