The chances of a deeper oil production cut by the Organization of the Petroleum Exporting Countries and their allies has seen a significant uptick in just the last couple of days, as the group known as OPEC+ readies for meeting on the sidelines of the World Energy Congress in Abu Dhabi.

President Donald Trump said over Twitter that he’d told his National Security Advisor John Bolton he was “no longer needed at the White House.” Bolton, who had taken a hard line and pushed for zero oil exports from Iran, resigned early Tuesday. On Wednesday, Bloomberg News, citing people familiar with the matter, reported that Trump discussed easing sanctions on Iran in a move to sure a meeting with Hassan Rouhani, Iran’s president, later this month.

Bolton’s sudden firing “could be a catalyst for a material de-escalation in the Iran [nuclear] standoff” that could bring back around 700,000 barrels a day of Iranian barrels onto the world market, possibly by the first quarter of 2020, said strategists at RBC Capital Markets, led by Helima Croft, in a recent note.

Bolton’s departure news led to a decline on Tuesday, and reported talk of easing Iran sanction prompted an even sharper fall Wednesday. October West Texas Intermediate crude

CLV19, -2.44%

 traded at $55.88 a barrel, down $1.53, or 2.7%, on the New York Mercantile Exchange in Wednesday dealings. November Brent crude

BRNX19, -2.24%

lost $1.80, or 2.9%, to $60.58 on ICE Futures Europe.

James Hatzigiannis, senior strategist at Long Leaf Trading Group, said there’s a chance that Trump could “soften” the current sanctions on Iran to “entice a negotiation meeting with Iran.”

Trump pulled the U.S. out of the 2015 Joint Comprehensive Plan of Action, also known as the Iran nuclear deal between Iran and a group of world powers, in May 2018. In retaliation, Iran has since violated elements of the deal that limit Tehran’s development of its nuclear program.

RBC Capital Markets’ Croft said Trump may consider some form of a financial lifeline for cash-strapped Iran, noting that France has previously proposed providing a $15 billion credit line, backed by around 700,000 barrels of oil.

That arrangement would require the U.S. to “grant waivers to allow foreign refineries to legally take the Iran product” and in return, Iran would agree to forego further breaches of the nuclear deal, she said.

“We think the odds of a near-term diplomatic off-ramp have increased” to around 35%, she said, referring the potential for some sort of deal, but “it is my no means certain.”

For now, “Iran is showing no willingness to speak [with the U.S.] until the sanctions are pulled off,” Hatzigiannis said. However, if Trump softens the sanctions and talks with Iran did not go well, he expects Trump to “come down with harsher sanctions.”

Still, news that Trump is considering easing Iran sanctions is likely to “overshadow” the meeting Thursday of the Joint Ministerial Monitoring Committee, or JMMC, said Matt Smith, director of commodity research at ClipperData.

The JMMC monitors compliance with output reductions set by an OPEC+ agreement that began at the start of this year. OPEC and its allies had agreed to cut a collective 1.2 million barrels of oil production from late 2018 levels to help balance the market.

The meeting “has the potential to change the game,” said Scott Gecas, chief market strategist at Walsh Trading. “With the U.S. continuing to increase output and if sanctions on Iran ease, this will bring more supply to the market.”

If there’s no change to OPEC’s production cuts, that would “not be enough to offset the increased supply from Iran,” he said. Then again, if OPEC sees the easing of sanctions as a threat, they’ll cut output further, said Gecas.

Uncertainties will plague the market until it gets further clarification on Iran sanctions.

“What the cartel discusses is a moot point, given how the supply landscape could change very quickly,” Smith said.

“With an IPO fast approaching, Saudi Arabia will be keen to support oil prices,” he said. “Given the latest developments, their production cut may be getting a bit larger.”

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