Even if these predictions prove too optimistic in the short-term, Iran holds 10.5 percent of the world's total proven oil reserves, according to OPEC's 2014 Annual Statistical Bulletin, the fourth largest in the world. These reserves are mostly onshore with favorable geology that enables development costs well below global averages. According to National Bank Financial's estimates, Iran's cost of production is $10-$15 per barrel, which is far below deep water, shale and oil sands operations.
Read More Buy this energy stock despite oil slide
Additionally, it is not only Iranian output that is likely to increase. Several OPEC members are already pumping at higher levels than they ever have, yet in amounts still below their maximum capacity. With these countries, notably Saudi Arabia, retaining scope to accelerate production, they will undoubtedly keep the spigots open and attempt to beef up their long-term customer contracts now, in this interim period before the sanctions are removed. For the Iranians to win back market share from prior customers, they may be forced to offer discounted pricing, which could further dampen oil prices.
According to the terms of the nuclear deal, the earliest time that the sanctions could be removed is mid-December. With the steep selloff in oil prices already witnessed in anticipation of this – crude oil prices are down approximately 20 percent in the month of July – any headline news in the fourth quarter about a delay in the sanctions-lifting process could well spark a relief rally, potentially of 5 percent. These gains could be more meaningful in degree and duration depending on where we are at that point in the supply-rebalancing process. Critically, if U.S. production decelerates toward the end of the year – admittedly, a big "if" – the trajectory of prices could re-gear to the upside. .
Read More Oil up after 4-day loss on bets for US stock drop
There's a lot that must still happen before the sanctions are removed, there is indeed an overlooked possibility that sanctions remain in place at the start of 2016. Not only will the legislative review process in the U.S. be messy, but the International Atomic Energy Agency has no small order in ascertaining that enriched uranium stockpiles are reduced, that two-thirds of installed centrifuges are eliminated and that a working monitoring system is in order. After Iran's Supreme Leader Ali Khamenei recently vowed to defy American policies in the region despite the deal, it is clear that Iranian compliance and cooperation cannot be assumed.
Will China stocks burn oil?
In the near-term, the Iran deal will continue to weigh on prices. But by year end, there are more positive pricing implications. If the sanctions are disbanded on schedule, a stronger Iran could result in more geopolitical risk and a stronger oil price. Meanwhile, delays to the sanction removal will provide more time for the world's supply imbalance to self-correct. As a result, by the time that Iranian supplies did eventually reach the market, there would greater demand to absorb those barrels and a minimal downside to price.
Commentary by Tamar Essner, energy analyst at Nasdaq Advisory Services.