Against expectations, Iranian negotiators have brokered a deal with US and other foreign government officials, which will compel the Islamic Republic to temporarily put the kibosh on some of its nuclear activities in return for about $7bn (£4.3bn) in sanctions relief. Both Saudi Arabia and Israel expressed dismay at the deal but at this early stage there are few concrete implications for investors in UK oil and gas stocks, although that could change if relations continue to thaw.
Under the terms of the deal, Iran will not be allowed to increase its oil sales for six months, so the initial 2.5 per cent fall in the price of Brent crude was probably linked to improved perceptions over the Middle East security situation rather than worries over excess global inventories. After all, despite the cash that's heading Tehran's way from oil accounts previously frozen in foreign banks, the global coalition still hasn’t lifted its import embargo on Iranian oil, which has driven the country down from second to fifth in the OPEC pecking order.
So while Iran's principal buyers will continue to be the big energy-hungry Asian economies, such as China and Japan, the Iranians have reportedly started a charm offensive aimed at attracting inward investment from European majors, including Royal Dutch Shell (RDSB), Statoil and Total. It is thought that the Iranians will need to significantly improve the terms offered to foreign oil companies if it is to pull in the estimated $50bn to $60bn needed to develop new wellhead and refining assets. But given that the country boasts the world's fourth largest oil and gas reserves, it's conceivable that an eventual repeal of the western embargo could substantially boost daily output for the majors involved - Shell chief among them.
Of course, given Israel's sway in Washington, coupled with the fact that many US congressmen have also expressed concern that the deal only freezes Iran's uranium enrichment without reducing its capacity, there's every chance that the deal, along with any chance for a lifting of the embargo, will be scuppered in favour of renewed sabre rattling.
