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Today's nuclear deal between Iran and the so-called P5+1 - that's the U.S., China, Russia, Britain, France and Germany - well, it has significance beyond arms proliferation. Millions of barrels of Iranian oil could flood the global market. Prices are already low, thanks to a glut in supply, and this morning's news of a deal caused a further dip in prices. NPR's Jackie Northam looks at how quickly Iran could ramp up production.
JACKIE NORTHAM, BYLINE: Iran has the fourth-largest oil reserves in the world, but the sanctions in place since 2012 sliced Iranian oil exports and their revenue by more than half. Getting the oil flowing again will provide a much needed injection into Iran's economy, but it's not going to happen overnight.
ROBERT MCNALLY: Don't expect Iran's oil to be able to return legally until well into 2016.
NORTHAM: Robert McNally, the president of Rapidan Group, an energy consulting firm, says there are a number of steps before the oil sanctions are lifted, including verifying Iran has complied with some nuclear-related measures. McNally says even once the sanctions are lifted, it would be difficult for Iran to return the 2.6 million barrels a day it was producing in 2011 because Iran's aging oil fields need to be modernized and refurbished. McNally says European oil companies, like Total and Statoil, are eager to get back into Iran.
MCNALLY: It's very clear the European oil companies are chomping at the bit, and they've made no secret about it. Trade delegations have traveled there. Leaders of these oil companies have expressed publicly the determination and eagerness to get back in. And the refiners that used to buy Iranian oil are very eager to start buying Iranian oil again.
NORTHAM: But the U.S. has its own sanctions against Iran that don't fall under this nuclear deal. McNally says that will affect American oil companies.
MCNALLY: And I think there's an understanding that the politics are not going to improve fast enough in the near term anyway to allow the U.S. oil companies to go back. So they know that they are on the sidelines for the foreseeable future.
NORTHAM: But even when Iran ramps up its production, it faces challenges. The sanctions cost Iran their market share over the past four years and other producers have moved in, says Jan Kalicki, an energy specialist with the Wilson Center.
JAN KALICKI: The Saudi's have established a significant market share, so the question is what kind of reaction there will be from the Saudis as the Iranians come in to market. And I think that the Saudis will fight to maintain their own market share in the marketplace.
NORTHAM: Gary Hufbauer, an energy specialist with the Peterson Institute for International Economics, says regional rival Saudi Arabia may decide to put the economic squeeze on Iran by pumping more oil and driving the price still lower.
GARY HUFBAUER: That's a big decision that the Saudis will make. Of course, they would hurt themselves, but they might calculate we'll hurt Iran even more and in the long term, that's a good deal for us - Saudi Arabia.
NORTHAM: Still, Hufbauer believes Iran will regain market share with countries like China and India, but at a price.
HUFBAUER: They're going to drive a very hard bargains for Iran to sell oil below the world price. If you're willing to take a haircut on your price of oil of, say, 10 percent, 15 percent, you can sell it all and that's what Iran will do.
NORTHAM: Hufbauer says Iran may insist countries pay upfront, getting a discount with no guarantee they'll get the oil if Iran reneges on the nuclear deal and can't deliver it. Jackie Northam, NPR News, Washington. Transcript provided by NPR, Copyright NPR.
