U.S. banks are starting to feel the impact of lower oil prices, as they have begun reporting higher loan loss provisions due to their exposure to the energy sector, according to a new report from credit rating agency Moody’s Investors Service says.

Two of the big U.S. banks that reported earnings last week, Wells Fargo & Co. and JPMorgan Chase & Co., revealed during their earnings calls that they have seen asset quality deteriorate in their comparatively small energy loan portfolios, Moody’s notes in the report “This development is credit negative for those U.S. banks with more significant energy-lending concentrations because it will result in comparatively higher loan-loss provisions,” the report says.

The major risk for banks with large exposures to the energy sector is that a prolonged slump in oil prices would weaken the energy companies’ ability to offset that impact of lower cash flow with expense cuts, the credit rating agency says. “This problem worsens the longer that prices remain depressed, leading to higher provisions for the banks,” it says.

Currently, Moody’s outlook has oil prices gradually rising to US$60 per barrel in 2016 and US$65 per barrel in 2017; which “should prevent the need for banks to make appreciably higher loan-loss provisions in the coming quarters,” the report says.

However, if last week’s deal to curb Iran’s development of nuclear weapons leads to a lifting of trade and financial sanctions against the country, this could reduce the expected increase in the price of oil as Iranian production returns to the market, the report notes.

“Estimates of how much oil Iran could add to international markets vary up to an additional one million barrels per day over the next one to two years. The Institute of International Finance estimates that Iranian oil exports will rise to four million barrels per day by the end of 2017. And according to FACTS Global Energy, an energy consultancy, Iran has 30 million barrels of oil in floating storage, which could be released relatively quickly. Absent a rise in global demand, an increase in supply of this magnitude would inevitably depress prices,” the report says.