The framework agreement between Iran and the P5+1 group on April 2 removed the "bottleneck" for Iran's oil exploitation activities, causing oil prices to suddenly plummet.

MarketWatch cited data from the New York Mercantile Exchange as saying that world oil prices continued to fall by nearly 4% on April 2. Brent crude oil for May delivery fell $2.15, or 3.8%, to $54.95. US West Texas Intermediate (WTI) crude oil also fell $0.95, or 2.0%, to $49.14 a barrel.

Oil prices fluctuate in trading session 2/4

MarketWatch also quoted financial analyst Naeem Aslam of AvaTrade as saying that the framework agreement on the nuclear issue between Iran and P5+1 will pave the way for Iran to increase its crude oil production. “With excess supply, oil prices will naturally ‘slip’ and fall faster than ever before.”

“We could see the price of this vital fuel for every economy easily plummet to $30 a barrel,” Mr. Aslam predicted.

Currently, due to the embargo, Iran can only export 1 million barrels of oil compared to 2.5 million barrels/day before the embargo. With its potential, Iran can increase its crude oil exports by 600,000 to 800,000 barrels/day within a few months.

However, Mr. Bob McNally, former advisor to US President George W. Bush, currently an advisor to the energy research company Rapidan Group, said that the above possibility cannot become a reality immediately because the economic sanctions "cannot be lifted before the end of 2015, or even early 2016".

Deal that pleases the majority

After eight days of round-the-clock negotiations, on April 2, the P5+1 group (including the US, UK, France, Russia, China and Germany) and Iran reached a framework agreement on Tehran’s nuclear program. The parties agreed on the major contents and directions, paving the way for a final agreement in the remaining three months, ending on June 30.

Iranian Foreign Minister Javad Zarif at a press conference announcing the results of the negotiations (photo: AFP)

Speaking at a press conference, Iranian Foreign Minister Javad Zarif said that the negotiations between Tehran and the P5+1 group had achieved a significant breakthrough: “The results achieved by 2/4 are important because they are the basis for a full agreement. Now the parties can start preparing a final draft agreement with relevant provisions, based on the solutions we have reached in the past few days. Iran will be able to continue its peaceful nuclear program but there will be restrictions on the level and duration of its uranium enrichment program as well as the amount of nuclear material stored.”

The Iranian foreign minister added that Natanz would be the only facility for uranium enrichment according to a mutually agreed timetable. The Fordow facility would be converted into a nuclear and atomic research center. The Arak heavy water reactor would be rebuilt with international assistance and cooperation so that it would no longer be capable of producing plutonium.

The framework agreement reached on the night of April 2 between Iran and the P5+1 group (Russia, the US, China, the UK, France and Germany) will limit Tehran's uranium enrichment capacity and open up new opportunities for scientific cooperation in the country's energy sector. That is the assessment made by the two spokespeople for the negotiations in Lausanne (Switzerland), the European Union (EU) High Representative for Foreign Affairs and Security Policy Federica Mogherini and Iranian Foreign Minister Zavad Zarif, after signing the historic agreement ending 12 years of negotiations on Iran's nuclear program.

US President Barack Obama described the deal as “historic”. US Secretary of State John Kerry said April 2 was a “great day”. Iranian President Hassan Rouhani said the parties would immediately begin drafting a comprehensive treaty.

French President Francois Hollande was cautious, saying the West could reimpose sanctions if Tehran did not fully implement its commitments. German Chancellor Angela Merkel said the international community had “never been closer to a deal to prevent Iran from developing nuclear weapons.”

Meanwhile, the Russian Foreign Ministry assessed the agreement between Iran and the world powers as a recognition of Iran's right to develop civilian nuclear energy. Moscow also assessed that this agreement would have a positive impact on the tense political situation in the Middle East.

But… upset some oil countries

According to analysts, oil exporting countries face a deficit of hundreds of billions of dollars from the Iran nuclear deal. Business Insider forecasts that before the Iran-P5+1 framework agreement was approved, Arab oil exporting countries would have a budget deficit of at least $122 billion in 2015.

An oil refinery (photo: AFP)

This figure is based on the oil price situation of around 49 USD/barrel as well as the ability to maintain this price, so as not to fall further for at least the next 3 years. However, with the information provided by financial analyst Naeem Aslam: the possibility of oil prices falling to 30 USD/barrel, the damage to the Gulf countries is much more "terrible".

Oil prices began to fall from $100 a barrel in June 2014 due to a number of reasons, including excess production as US shale gas technology boomed and global oil demand declined. Oil prices continued to fall freely since the Organization of the Petroleum Exporting Countries (OPEC) decided not to cut production in November 2014. On March 26, after Arab countries launched airstrikes in Yemen, oil prices suddenly jumped 6% to over $51 a barrel.

World political economic analyst Tyler Richey has a brief analysis on 7:00's Report: Putting this Framework Agreement on the right track, or in other words, protecting it, will not be simple in the community of oil-rich Gulf countries, when Iran itself is a country that still has to face the animosity of some leading OPEC countries. Not only that, on the US side, President Obama will face many difficulties in protecting this agreement against the threat of sabotage from the Republican Party./.

According to VOV