An image taken on November 10, 2019 shows the Iranian flag at the Iranian nuclear power plant in Bushehr during the official start-up ceremony for the site’s second reactor.
ATTA KENARE | AFP via Getty Images
Russia has abandoned its threat to derail the revival of the 2015 Iran nuclear deal over recent sanctions imposed over its invasion of Ukraine, reopening the path to an agreement after nearly a year of negotiations.
Officially known as the Joint Comprehensive Plan of Action or JCPOA, the parties to the pact were reportedly close to reaching an agreement in Vienna until the US and EU imposed sweeping sanctions on Russia over its invasion of Ukraine. Moscow then demanded that Western sanctions not affect future trade with Iran, which led to the suspension of talks last week.
Russian Foreign Minister Sergei Lavrov said on Tuesday he “received written assurances” from the US that their demands would be met, meaning talks are likely to continue. The near-simultaneous release of British-Iranian dual nationals after years of detention in Iran back to the UK, and the announcement of the UK paying off a $530 million multi-year debt to Iran, improved the prospects for an agreement.
“The deal could be done fairly quickly – possibly as early as this week,” analysts at political risk consultancy Eurasia Group wrote on Wednesday.
“Russia’s decision to soften its demands removes the biggest obstacle to resurrecting the JCPOA,” analysts write, estimating the chances of a deal at an optimistic 80%. “The release of two British-Iranian prisoners is another positive signal that negotiations are nearing completion,” they said.
Iranian oil back on the market?
As the US stops importing Russian oil and the EU seeks to reduce its energy dependence on Moscow, Iranian oil is looking more attractive, as is oil from other heavily sanctioned countries such as Venezuela, which is reportedly in energy talks with government officials. US persons. .
A return to the 2015 deal that originally lifted sanctions on Iran in exchange for curtailing its nuclear program would see Iranian oil back on the market at a time when energy shortages and geopolitical volatility have pushed oil prices to their highest ever in over a decade.
This “will increase global oil supplies and could put downward pressure on prices,” James Swanston, a Middle East and North Africa economist at London-based Capital Economics, wrote in a note on Thursday, adding that “it could also help ease geopolitical tensions.” . in the region.” However, a return to previous levels of production will take time.
Commodity analysts at S&P Global Platts predict that if sanctions on Iran are lifted immediately, it could export an additional 500,000 barrels of oil per day to markets from April to May this year, bringing the figure to an additional 1.3 million barrels per day. by the end of this year.
Iran was the fifth largest producer in OPEC in 2020. Before the Donald Trump administration unilaterally backed out of the deal in 2018 and re-imposed devastating sanctions on Iran’s economy, the country was producing 3.8 million barrels of oil a day. That figure later fell to 1.9 million barrels and now stands at about 2.4 million barrels a day, according to the Atlantic Council, although most of that volume had to be stored in warehouses rather than exported due to sanctions.
Since the US pulled out of the deal, Tehran has made significant progress in its nuclear activities, increasing uranium enrichment and stocks far beyond the parameters of the 2015 deal.
This means that he has shortened his “breakthrough time” or the time it takes to build a nuclear bomb. Iran’s leaders have said its advance will continue until US sanctions are lifted.
Washington’s allies in the Persian Gulf are unhappy
Eleven months after the resumption of talks, with the US and Iran talking not directly but through European intermediaries, the remaining stumbling blocks relate mainly to issues related to sanctions, including the question of whether the Iranian Revolutionary Guard Corps will continue to be considered USA as a foreign terrorist. List of organizations.
“But they are unlikely to be insurmountable,” Eurasia analysts say, given that both Washington and Tehran want a deal.
The prospect of a return to the deal does not sit well with Washington’s allies in the Persian Gulf, especially Saudi Arabia and the United Arab Emirates, two of OPEC’s top oil producers and longtime adversaries of Iran. The two reportedly did not return calls from President Joe Biden as he tried to convince them to increase oil production to keep prices down.
OPEC has not announced any moves to increase output beyond a pre-planned increase agreed between OPEC members and their non-OPEC allies, led by Russia, in 2021.