Talks Fuel Hopes for Return of Iran Exports

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An influx of Iranian barrels would be a welcome addition to global oil markets, where supply tightness has pushed prices over $90 per barrel. But how close is it to happening? The resumption of indirect nuclear talks between Iran and the US in Vienna this week has fueled hopes that a revival of a nuclear deal in the near future is a distinct possibility. A proposal on the table for discussion between the two sides might not be cause for explicit optimism. But, in the words of EU High Representative for Foreign Affairs Josep Borrell, there is “hope because both sides have been showing willingness.” Talks might take days or weeks — and could still fail. But a deal that eases tough US sanctions on Iran's oil sector could help alleviate oil market concerns about producer output constraints, limited global spare capacity, buoyant energy demand and geopolitical tensions. For Tehran, the resumption of crude exports that fell below 500,000 barrels per day at one point following the previous US administration's withdrawal from the Joint Comprehensive Plan of Action (JCPOA) in May 2018 would potentially bring welcome financial relief for an economy battered by years of sanctions and fallout from the pandemic. Just how quickly Iranian oil could return to the market if a deal is reached would depend on several factors. These include Iran's ability to raise production at its fields swiftly, the pace at which sanctions would be lifted, and whether financial transactions with the Islamic republic would continue to be constrained by lingering US sanctions unrelated to the JCPOA.

Oil Supply, Sanctions, Oil Trade, Crude Oil
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