It's unclear how much oil will be restricted under the U.S. sanctions since U.S. partners in the nuclear agreement are against ending the deal, and Iran has said it will try to stay in it. Analysts expect some to comply but others, such as China, a party to the deal, may continue to buy Iranian oil and even increase its purchases at a discounted price.
According to analysts, Iran shipments could fall by 300,000 to 500,000 per day, compared with the 1 million to 1.5 million lost from the market during the Obama administration's sanctions on Iran.
"I think with Iran, the additional unknown, they'll have to wait and see over the next 180 days who orders what, what in the order book gets cut down," said John Sfakianakis, director of economic research at the Gulf Research Center. "The big ones are the likes of Japan and other Asian consumer countries. The order book has to be reduced, and they need to see who else is out there to take these orders."
The "Vienna" production agreement, in place since early 2017, removed 1.8 million barrels a day from the market, with both Saudi Arabia and Russia, as well as other members of OPEC and the alliance, giving up barrels.
The production agreement is scheduled to end at the end of the year, but OPEC and Saudi Arabia's energy minister have said it should continue in some form. The pact is seen as having helped bring world oil supply more in line with demand and driving prices higher. It was also helped by the loss of barrels from Venezuela, which is currently producing 1.5 million barrels, well under its quota.
Saudi Arabia and Russia also have to decide what the market requires in terms of production. "As we get close to $80, they have to consider that the market will be looking for their decision on next year," Sfakianakis said.
Sfakianakis doesn't see the price going much above $80. "Once we hit $80, then slowly you could see the market saying we could see $85, we could see $90. I think that's a little bit of an exaggeration. But I think around the $80 mark, or even if we surpass that, the producing countries, including Saudi Arabia, will be quite happy with that," he said.
It will take about six months for the effect of sanctions on Iran to become more clear, even though the Trump administration sanctions would block new business with the country immediately.
"They can slow-talk this thing … with a 180-day grace period, you're not required to do anything right now," said Helima Croft, head of global commodities research at RBC. "I think the White House just hopes the Vienna alliance will sunset and they put barrels on the market. This is where the White House is wrong. … You could have this group continue, and it goes into next year. … You can get a charter arrangement, and they continue to meet but they don't put more barrels on the market and keep the cut together."