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Iran’s return to the oil market could trigger a “positive supply shock,” sending oil prices plunging by as much as US$20 per barrel, although Saudi Arabia will probably move swiftly to ensure a softer, $10-drop in crude prices.
Increasingly crippling sanctions imposed by Western countries to punish Tehran for pursuing a nuclear program has limited Iran’s ability to export its primary production over the past few years.
But in recent weeks, both Tehran and Washington have replaced their sabre rattling with a softer tone, raising hopes of a diplomatic solution, especially as the Iranian government hopes to resolve the nuclear dispute within three to six months.
U.S. Secretary of State John Kerry was to meet Iranian foreign minister Javad Zarif on Thursday in what is billed as the first direct contact between the U.S. and Iran in six years. Foreign ministers from the U.K., China, France, Germany and Russia also were to join in the discussion.