According to Money Week’s John Stepnek, these political changes will take time to effect a market adjustment, if and when one materialises. “Now the US has agreed to relax some sanctions, in exchange for Iran agreeing to take it easier on the enrichment front”, Stepnek predicted. “It's a tiny step, with a final agreement planned for six months from now. And until then, with many people on both sides sceptical about the deal, it might take time for the consequences to sink in.”
And Stepnek’s cautious market outlook was verified by Peninsula Petroleum’s Richard Peacock who has seen little in the way of sensational market moves in the price of MGO. [Initially] “we did see the market go down a little bit”, Peacock explained, “but today MGO is back up by over one per cent, or 7.75 points.”
Following the news, the price of MGO fell by around 1.5 per cent, Peacock said. But the market responded strongly and the price has risen back to near parity at the time of writing. Furthermore, he added pricing has remained consistent from the beginning of November to the end, with the changes being incremental.
“For a lasting market adjustment you’d need something huge. This was big and it did affect the markets but they change daily; yesterday there was a big correction but today it has gone up again.”
Peacock did speculate that, if Iranian oil were introduced to the market at a cheaper price then it could trigger a lasting adjustment but this would be a slow process. And as Emad Mostaque of Noah Capital Markets said: "What is clear is that the two major powers, Iran and the USA, both want to get this sorted for the first time in quite a while and this bodes well for the future."