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What the Iran nuclear deal means for crude oil prices and the currency markets

AP Photo/Vahid Salemi
At the Tajrish bazaar, business is about to pick up.
By Matt Phillips
Published Last updated This article is more than 2 years old.

It actually happened.

The US-led world powers and Iran struck a historic deal today (July 14) to roll back economic sanctions on the Islamic Republic in exchange for curbs on Iran’s nuclear ambitions. The deal faces opposition from both Iranian hardliners and the US Congress, which could still derail the accord. But the negotiators’ work already is having an impact as financial markets digest the prospect of a country with the fourth-largest proved crude reserves and second-largest gas reserves effectively returning to the global trade system.

European benchmark Brent crude oil is down 0.6%, adding to a selloff of more than 9% in July. US benchmark crude oil is down more than 12% so far this month. Brent and US crude are down 46% and 49%, respectively, over the last year.

Also getting hit: the currencies of other large oil exporters. For instance the Norwegian krone and Canadian dollar are down 1% and 0.7% respectively on the news of the agreement.

Meanwhile, potential trading partners of Iran are benefitting. The Turkish lira, for example, rose to its highest in a year against the dollar after the deal was announced. Turkey already is a large importer of Iranian gas, and is looking to double trade with Iran by 2016.

The world is already awash with crude oil, as Saudi Arabia continues to pump.

As does the US.

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