With the US set to run out of on-land storage in the space of just three months and with the Iran nuclear deal still stuck in “tentative,” “maybe/maybe not,” purgatory (i.e. “we agree on the outline of a plan which will pave the way for an agreement but aren't sure how much of the plan or hypothetical agreement we want to share”), interesting times lay ahead for crude which, in a likely preview of what’s to come, traded in “deal or no deal” mode throughout Thursday’s session. With Tehran sitting on 9% of the world’s proven reserves, the lifting of sanctions and opening of the country’s oil fields to foreign investment could trigger a dramatic decline in crude prices as an extra million bpd gets set to be unleashed on an already saturated market.

Meanwhile, crude exports from from Iraq are hitting three-and-a-half decade highs while production, at 3.7 million bpd, is humming along at a 50-year high despite the ISIS presence in the country. As Bloomberg reports, 5% of the world’s VLCC fleet is currently parked in the Persian Gulf outside the Basra Oil Terminal, where tankers are now waiting an average of 16 days driving shipping rates to multi-year highs in the process. Here’s more:

Iraq’s biggest oil exports in more than three decades and winter winds are helping to keep shipping rates at a six-year high as a four-mile line of supertankers waits to load the nation’s crude. There are 22 of the industry’s biggest tankers, or almost 5 percent of the fleet, waiting to collect cargoes from the Basra Oil Terminal in the Persian Gulf, from where most of Iraq’s crude is shipped. The daily rate for supertankers transporting crude from the Middle East to Japan rose to $51,042 on Thursday, bringing the average for this year to $61,306, data from the Baltic Exchange in London show. Iraq’s oil output is rising faster than any other nation in OPEC as supplies from its southern oil province expand even as Islamic State fighters seize parts of the north. Tankers leaving Basra in the past week waited an average of 16 days, ship tracking data compiled by Bloomberg show. That compares with about 10 days normally, said Odysseus Valatsas, chartering manager at Dynacom Tankers Management in Glyfada, Greece. “The fact is it will definitely affect the market,” Valatsas, whose company’s biggest tankers can transport about 28 million barrels of crude, said by phone Thursday. “The more ships that are missing in the market, the higher the chance the market has to go up.” Iraq’s crude exports jumped 15 percent last month to 2.98 million barrels a day, the highest in 35 years, Oil Ministry spokesman Asim Jihad said by phone from Baghdad on Wednesday. The nation pumped 3.7 million barrels a day in March, the most since at least 1962, according to data compiled by Bloomberg.

And supply from Iraq isn’t going to slow…

Iraq will increase its crude production capacity to 4.7 million barrels a day in 2020, from 3.7 million last year, the International Energy Agency said in a report on Feb. 10.

Against this backdrop, Deutsche Bank considers what happens to demand in the event a concrete deal with Iran is reached...

A potential deal could allow insurers to cover tankers transporting Iranian oil, thus paving the way for Iran to increase exports which have fallen 150% (from 2.5 mmbpd in mid-2012 to 1.0 mmbpd currently). The implications for crude tankers, while difficult to quantify, could be significant in our view. Best case is we estimate an incremental 1.5 mmbpd of seaborne supply would translate to demand for 40 VLCCs on a voyage adjusted basis, equal to over 6% of the world’s VLCC fleet and having the effect of making an already tight supply picture even tighter.

...and then goes on to comment on the implications of this dynamic for crude prices and the floating oil storage play:

Another potential outcome from an Iran deal would be implications to oil prices. A sharp decline in spot and front month oil prices and potential resulting widening contango in the oil market could render the global floating storage trade profitable once again. So while we have said floating storage is very much “icing on the cake” rather than the central thesis to our positive view on the tanker space, the “risk” is very much to the upside in our view given the potential impact relatively minor levels of floating storage can have on spot rates (given already tight supply).

This echoes what we said last month: "...the important point here is that Soc Gen believes finding the level where this becomes economically viable (i.e. profitable) can serve as an important guide for where crude is headed. In other words, the bank is looking for the front end of the curve to fall until the contango is wide enough to make the floating storage play enticing."

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All of the above comes at a time when, as a recent policy brief from Stanford points out, crude prices are likely to be constrained for the long haul by a confluence of factors including surging U.S. shale production, a weakening OPEC, the shale revolution spreading globally, efficiencies in drilling, and more natural gas substitution for oil.

Whatever the case, what all of this suggests is that volatile times lay ahead for crude.