Fears that a nuclear agreement with Iran could end sanctions imposed on the country and flood the already oversupplied market with oil are "unduly bearish," the managing director at Clearview Energy Partners said in an interview on Tuesday.
"It's probably going to be a series of gates and steps, a process where Iran has to do some things, the West will give some sanctions relief," but the deal will hardly bring back crude exports to their full level, according to Kevin Book.
Last week oil prices started another leg downward as participants in negotiations over Iran's nuclear program suggested they are making progress toward a deal.
The April contract for U.S. crude touched a six-year low below $43 on Monday after prices rebounded slightly in January and February.
The analyst considers that the first steps will unlikely roll back sanctions enforced in 2012, which include a European Union import ban on Iran's petroleum exports, as well as measures that target insurance and transportation companies connected to its oil sector.
"That's one of the hardest things to restore if they do, so it might be six or 12 months out before you get that 300,000 to 500,000 barrels per day," Book said.
The U.S. Energy Information Administration suggests that net exports of Iranian oil have fallen from about 2.4 million barrels per day in 2011 to about 1 million. But some energy experts believe Iran could ramp up exports to 500,000 to 800,000 within half a year, according to Reuters.
The US Congress is at the moment considering two pieces of legislation that could derail an agreement, one that would impose further sanctions on Iran and one that would subject any deal to end sanctions to congressional review.
Both bills would need a veto-proof majority in Congress, and that does not look likely, Book considers.
"You might be able to pass a bill, but when the president vetoes it, the question will be where do Democrats stand? They're probably not all going to stand with the Republicans," Book said quoted by CNBC.
