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Watch for Dropping Oil Prices as Sanctions on Iran Dissipate

For the time being, it appears that Iran has come to an agreement with six world powers to stop producing weapons grade nuclear fuel in exchange for reduced sanctions on the OPEC member. While reduced Middle East tension is great for diplomacy, OPEC will need to negotiate with member countries, as the 30 million barrels of oil per day production cap will be challenged. 

In order to generate much-needed capital, Iran will want to increase oil production to pre-sanctions levels of 4.3 million barrels of oil per day from its current level of 2.8 million barrels, but OPEC is already producing at the cartels cap. With all member countries unlikely to cut back on production, Iran's increased production could likely oversupply the market, pushing crude prices lower. 

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This segment is from Tuesday's edition of "Digging for Value," in which sector analysts Joel South and Taylor Muckerman discuss energy and materials news with host Alison Southwick. The twice-weekly show can be viewed on Tuesdays and Thursdays. It can also be found on Twitter, along with our extended coverage of the energy and materials sectors @TMFEnergy.

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    And keep your eyes turned a little aside so you won't be blinded by the fireball in the mushroom cloud over Israel.

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Joel South

Joel is a University of Washington graduate and covers energy and materials for The Motley Fool. Be sure to follow The Motley Fool's energy and materials Twitter for all your energy and materials coverage.

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