US Allowing Iran to Sell Oil Unlikely to Impact Global Prices

WASHINGTON (Sputnik) — US President Barack Obama said in a memorandum last week that the United States would no longer pursue efforts to reduce Iran's sales of crude oil because Tehran had met its commitments under the nuclear agreement as stipulated in the Joint Comprehensive Plan of Action (JCPOA).

Obama also said in his memorandum that the United States had sufficient oil supplies from other countries, which could allow Washington to significantly reduce petroleum import from Iran.

"The US action might allow Iran to export significantly more oil, but the consequences for the world price are likely to be relatively small, since Iran’s output is a small fraction of the world market," Brown University Professor Jeff Colgan told Sputnik.

Instead of Obama’s decision affecting oil markets, Colgan noted, the reverse was true in that oil markets probably drove the timing of the White House’s move.

"The White House was more comfortable making this decision now that oil prices are around $50 per barrel, up almost 70 percent since mid-January," Colgan added.

Ball State University Professor of Economics Cecil Bohanon told Sputnik the decision was not unexpected, hence the new Iranian oil volumes have likely already been factored into market pricing models.

"Unlike the Canadian oil sands outage, which was unexpected, the Iranian news has been more or less baked in the cake for some time," Bohanon stated.

Earlier this month, oil prices jumped two percent after a wildfire in Alberta cut production from Canada’s oil sands region.