The nuclear framework agreed between Iran and western powers to manage the country’s nuclear programme in exchange for a lifting of trade sanctions pushed oil prices down 4%, but experts believe it will take time for Iran’s oil output to shift the commodity’s trade patterns.

Iran’s economy has suffered from a multitude of trade and investment restriction from the US, the EU and the UN for most of the past 30 years, so the news of a preliminary agreement between the country and the P5+1 sent crowds of Iranians to the streets to celebrate.

The nuclear framework agreement implies the reduction of Iran’s centrifuges from 19,000 today to 6,104 under the deal, with only 5,060 of these enriching uranium for 10 years. Iran has also agreed not to enrich uranium over 3.67% for at least 15 years (much lower than the level needed to build a nuclear weapon), as well as converting its Fordow enrichment facility into a nuclear, physics and technology research centre, and providing access to the International Atomic Inspection Agency (IAEA) for “regular inspections”.

In exchange, US, and EU and UN nuclear-related sanctions will be suspended “after the IAEA has verified that Iran has taken all of its key nuclear-related steps”, though it is not clear whether all sanctions would be removed at once.

Despite the instant reaction in oil prices, there will undeniably be a lag before Iranian oil causes any kind of stir in the export market: once the deal is ratified, it will take some time for oil contracts to be negotiated, and another few months for oil to leave the country.

Iranian officials wasted no time in visiting China to negotiate increased oil sales.

With most of the oil set to be exported to Asia, Iranian officials wasted no time in visiting China to increase oil sales, just five days after the deal was agreed on. But the country’s swiftness will not change the fact that oil companies around the world have reduced their capital expenditure for the coming year or two on the back of low oil prices – and investment might be difficult to secure.

Delta Economics global vice-president Tony Nash tells GTR: “Over the long term it will [have an impact], but when you look at the capex cycles right now, the capex budget within the international and national oil companies has been cut back by 30% or so for the current fiscal year, and many of the people I’ve spoken to have said those planning cycles for 2016 have already been finalised so these capex cuts will likely apply to 2016 as well.

“Will there be exploration and investment in Iran in the current cycle? I’m not so sure about that – even the NOCs in Asia have cut back on their exploration and production budget. You may get some Chinese, Japanese and Korean firms that are willing to go in and spend money, because they’ll likely be the ones who benefit the most.

“You’re really looking at probably two years before that oil hits the market, so will Iran push oil down to US$20 a barrel? I can’t say with any certainty that that is what will happen because oil prices two to three years from now may be at a very different level.”

Though there are still doubts around the likelihood of the nuclear framework being implemented – particularly in the US, where Republicans are actively campaigning against it – all parties involved seem determined to see it through before the June 30 deadline.

I hope we will concentrate now on the remaining steps to get this vital job done. US secretary of state John Kerry

“I know that some will suggest that the agreed parameters are not sufficient, but the burden will be on them to prescribe a specific and plausible alternative to a better outcome. The fact is that we have reached an important milestone in our years-long effort to ensure that Iran’s nuclear program is and remains wholly peaceful. I hope we will concentrate now on the remaining steps to get this vital job done,” US secretary of state John Kerry said in a statement last week.

The fact is that parts of the agreements still divide opinions: some would have wanted Iran to stop using all of its centrifuges; others will argue that inspections are difficult to carry out.

And in the US in particular, time is ticking: “In terms of the US political process, it has to be very quick, because if it’s too close to the presidential election race, which starts in October/November, it will become a highly-contested political issue. If it is delayed and pushed back to August/September for things to finalise, then I think the Republicans can successfully make it a presidential primary debate issue, and that’s a fairly easy sell for them to get the American people on their side, which would then complicate acceptance of the lifting of the sanctions,” Nash adds.