Iran is a more likely source of new supply.The country's negotiators are trying to strike a deal with America that would lift economic sanctions in return for limits on its nuclear ambitions.If they succeed, Iran could add around 1m barrels a day to the market by the end of the year; it could also sell the 200m barrels it currently has in storage.Chris Midgley of s&p Global Platts, a data firm, points out that Saudi officials do not want a replay of 2018,when America's decision not to reimpose oil sanctions on Iran took them by surprise and sent oil prices lurching downwards.What, then, to expect from the cartel and its allies? There are three scenarios.One is that countries start producing whatever they want, a price war ensues, and oil prices tumble. Analysts reckon that this is the least likely outcome.Energy ministers still bear the scars of the ill-timed price war of March 2020, when Russia and Saudi Arabia failed to agree on production cuts.The market was flooded with oil just before demand suffered its covid-induced collapse.Another possibility is that a new deal fails to be struck, and that countries stick to their current quotas.That would mean the extra post-July production increases that the market had been expecting do not materialise.
