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Iran’s Nuclear Agreement Heralds Changes to Oil Industry

Date: 30 July 2015

A historical agreement has been made between Iran and the rest of the world regarding the country’s nuclear activity. As reported by the BBC, it is believed that this agreement will represent a “new chapter” in Iran’s relationship with the rest of the world, President Hassan Rouhani said.

The negotiations initially began in 2006 and are between Iran, the US, the UK, France, China, Russia and Germany. As the limitations to nuclear activity were made in return for a lift on economic sanctions in Iran – including the export of oil – the deal has resulted in the cost of oil dropping by more than $1 per barrel.

The new deal means that “every pathway to a nuclear weapon is cut off” in Iran, President of the US, Barack Obama has stated – but the exchange means that Iran could now increase oil exports by up to 60% within a year. This is according to a survey from Reuters that questioned 25 expert oil analysts.

Of the analysts questioned, nearly 50% believe that Iran could increase its oil output by 250,000 barrels following the agreement within the first six months. Over 30% of the analysts believe this could in fact be closer to 500,000 barrels.

Hassan has always insisted that nuclear activity in Iran has been peaceful, but the country has still suffered from what have been described as “crippling” international sanctions. Before these are officially lifted, however, nuclear inspectors will be employed to ensure the country is complying with the terms of the deal.

Bijan Zanganeh, Iran’s oil minister, has said that he is confident the country will reach full capacity shortly. This will enable the country to invest and expand on development projects, as up until now the sanctions have “severely” limited these projects.

With the removal of the sanctions, international oil prices will decrease further, as countries such as Saudi Arabia and others in the region are already producing in excess of 2.5 trillion barrels per day above demand.

Along with the ever evolving nature of oil extraction, with less conventional extraction methods such as fracking becoming more popular in recent years, as well as shifting political control, the oil industry is undergoing significant changes. Political upheaval means OPEC now holds less of a monopoly on the market, and changing attitudes to brownfields sites means as much oil is being extracted from these areas as possible.

With this significant change to the oil industry and an increase in supply, businesses and professionals in the sector are bearing witness to the mass creation of new roles – specifically in the refinement sector. As supply skyrockets and the need to transform the oil from its natural state into a product that can be utilised on the mass market becomes more prominent, industry experts are looking for candidates with experience in base and operational refinery roles, as well as refinery construction.

If you would like to discuss these developments in the oil industry and how they may affect you – either as a candidate or a professional looking to hire – feel free to contact our team today here.

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What are your thoughts on how this agreement will impact the Oil industry? Please join the conversation and post your comments here.

Tagged In: LVI Associates
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