According to John Kilduff of Again Capital, if the talks are extended:
1. The estimated 30 million barrels of Iranian crude sitting on tankers will remain there for now.
2. Iran's plan to up production by 1 million barrels a day from a current 2.8 million will stay on hold, as it will not be able to collaborate with Western companies or export more oil.
In that case, the price impact will be minimal, and the market's sense that a deal is not imminent has already filtered through in slightly higher prices in the futures market.
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"At this point, the negotiations going south is probably worth $2 to $3 per barrel," Kilduff said. West Texas Intermediate futures were at $61.20 per barrel Wednesday, and have been trading roughly between $57 and $62 per barrel.
Strategists say the price of oil was supported by hardline comments Tuesday from Iran's Ayatollah Ali Khamenei.
The supreme leader demanded most sanctions be lifted even before Iran dismantles nuclear infrastructure or allows international inspectors to verify it is keeping its commitments. He also ruled out freezing nuclear enrichment for as long as a decade and reiterated a refusal to allow military sites to be inspected.
Complicating the situation, Iran's parliament on Tuesday passed a bill banning access by the International Atomic Energy Agency inspectors to those sites.
"I still think there could be a deal by late this year, and you could get oil in the market by the end of the year," Valliere said.
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However, there are heightened chances the deal will hit a snag.
"It's almost as if they're deliberately trying to provoke Congress. Even if there is a deal a few weeks form now, there's such a state of suspicion in Congress there's a chance that Congress could thwart this. [President Barack] Obama would veto any effort to thwart this, but there's a chance that veto could be overridden," he said.
Valliere said that gives higher odds to the idea that the talks break off completely, which would make Iran more aggressive in its efforts to build a weapon, creating an even more uncertain and unstable atmosphere in the Middle East.
If talks do fail, Israel could decide to take action on its own, but Valliere said the Obama administration would not support that approach. However, things would shift once a new president is in the White House, and whether it's a Republican or Democrat Hillary Clinton, a more aggressive approach to Iran would be supported.
Kilduff said if talks fall apart, the price of oil could immediately jump $10 a barrel.
"The knee jerk is going to be higher. Also I would assume relations will deteriorate between the U.S. and Iran, and maybe others, and that will raise the security premium for potential military action that Israel will push for," he said.