GOLDMAN: The Iran deal won't impact the oil market until 2016

The nuclear deal reached between Iran and the P5+1 could weaken oil prices, but not just yet.

In a note to clients on Wednesday, Goldman Sachs analysts predicted that the lifting of sanctions on Iran will be bearish for oil, though the effects won't be seen until 2016.

The deal still has more steps to go through, including officially passing through the UN Security Council and US Congress.

"The timeline of the various steps required to reach such sanction relief suggests that Iranian oil flows will continue to remain capped until 2016, consistent with our expectation," Goldman wrote in a note to clients.

"The impact of sanctions relief on Iran's production would likely initially be a draw-down of floating storage and an increase in production of several thousand barrels per day."

Goldman added that oil supply is at risk of being too high in 2016, because previous estimates had "conservatively assumed no increase in Iranian flows." Plus, other OPEC members have already increased their production, exceeding Goldman's initial 2016 forecast, and even bringing risk to 2H15 forecasts.

Simply put, more oil production from OPEC countries, including Iran, - which attempt to collude to keep supply low and prices high - will bring prices down.

A gradual increase in Iran's oil exports would start with the drawn down of the Islamic Republic's floating storage of c.20­-40 mb, once the EU import bans are lifted. This would be followed by a jump in production, which Goldman says could lead to a c.200-­400 kb/d increase in Iranian exports in 2016.

Much uncertainty still exists regarding the timing of the sanctions relief, and whether or not Iran will be able to reach pre-sanction production levels, but Goldman is convinced that the deal will eventually hurt oil prices.

On Wednesday, West Texas Intermediate oil prices were down about 1.1% to around $52.40 a barrel.