Now that Iran can return to the global economy and sell oil openly, I see one of three things happening
1) Oil prices will collapse beyond the short term (they will collapse in the short-term regardless)
2) Oil prices will stay down but the global economy will improve with all the money Iran has to spend
3) The global economy will improve and oil prices will go back up from additional consumption
Iran is going to be on a buying binge but some of it will not be reflected in the global economy improving in the short term of 1 to 3 years because Iran has to boot strap itself back up. There is a lot of infrastructure that needs work and people trained. Even the potential sale of planes from Airbus will take time to realize. It could be Iran buys a lot of stuff now and it just sits. The Iranian hardliners are going to insist on a lot of new “toys” for the nuclear deal and that will cut into improving the economy and standard of living.
There is also the geopolitical conflicts Iran participates in like those of Yemen, Syria and Lebanon. Iran has yet to renounce the destruction of Israel and sanctions are still in place for military equipment and the ballistic missile program. If Iran keeps picking fights with Saudi Arabia, the Saudi’s will go ahead and acquire nuclear weapons from Pakistan, a program the Saudi’s paid for.
Iran is still a long ways from being stable or a reliable place to do business
There is an additional feature to the end of Iranian sanctions – the demise of Russian oil and gas sales. Western Europe wants to get away from Russian supplies as Russia is even more willing then OPEC to use oil and gas supplies as a political weapon. Although Russia like to think it’s more then a one-trick pony, it isn’t and the second collapse of the Russian economy – and government – may only be weeks or months away.
Worried about sub-$20 crude? Some sellers are already there
The Iranians well and truly played the Russians and Putin. China, as Russia’s only market that wants them, now owns Putin. Putin will desperately need a deal with the West to get sanctions lifted as soon as possible or he will be looking for a new job.
Russian ruble drops to a new low, battered by weak oil prices
It could be considered something of a “backdoor” legacy for President Obama that this is happening. he was trying to wreck the U.S. oil industry to drive up prices to make electric cars more viable by ending access to to federal lands. Instead he created the rush to private land and the fracking boom that led to America to becoming virtually energy independent. And with the end to oil export embargo, pressure is being created on OPEC and “near-OPEC” countries, like Russia, to defend their market share.
OPEC and “near-OPEC” countries are in a bind. If they raise prices it opens the door to American producers and loss of market share for the 20 or so years that Brent LCOc1 and West Texas Intermediate (WTI) CLc1 would run wild or to keep prices down and suffer the effects to their economies. It might seem after that 20 years OPEC and “near-OPEC” countries would regain the power to control oil again, but that will be enough time for countries importing oil to make the shift to a renewable energy economy, perhaps even a fusion economy (if Lockheed can deliver), which would be a genuine revolution
The course of history hasn’t changed, but a page has been turned and the one-trick pony economies will fade into the background