Baku, Azerbaijan, July 13
By Aygun Badalova - Trend:
The agreement that can be signed between Iran and P5 +1 (the US, UK, France, Russia, China and Germany) July 13 and will lead to lift of sanctions imposed on Iran, is one of the main downside risks for oil prices in the short term.
The analysts of the US JP Morgan bank said in their reports that a renewed and stronger probability of Iran and P5+1 deal also contributed to oil price declines earlier last week, which was partly reversed on July 9 as the negotiations did not meet the US congressional deadline.
Currently, the P5 +1 work on the final nuclear agreement with participation of the European Union and Iran. It was earlier reported that the sides hope to reach an agreement by July 13.
Late last week, the world oil prices increased based on the expectations that the P5 +1 and Iran will fail to reach an agreement on Iran's nuclear program by the scheduled date.
The price of August futures for the North Sea Brent increased by 1.61 percent and reached $59.53 per barrel. This is while the price of August futures for WTI oil rose by 1.57 percent and stood at $53.61 per barrel.
Earlier, Iran said that if the sanctions imposed on the country are lifted, it will be able to increase the oil production in three months and bounce back to the pre-sanction level of export. In particular, the country plans to bring the export volume to 2.5 million barrels per day.
JP Morgan analysts expect additional volumes will be in the region of 300,000- 500,000 barrels per day, which is less than half the volume that Iranian government officials have cited as possible.
However, taking into account the uncertainty on the possibility of reaching a deal on quotas between Iran and OPEC countries, these volumes will also be sufficient in the already oversaturated market.
JP Morgan analysts forecast that the average price for Brent and WTI will be $62.7 and $56.6 per barrel, respectively in 2015. This is while the average price for Brent and WTI will be $71.5 and $65.5, respectively in 2016.
The world oil production increased by 550,000 barrels per day and reached 96.6 million barrels in June, according to the July report of the International Energy Agency. The production in OPEC countries increased by 340,000 barrels per day and stood at 31.7 million barrels in June.
Edited by SI
Aygun Badalova is Trend Agency's staff journalist, follow her on Twitter: @AygunBadalova