Iranian oil potentially returning legitimately to the market will not be a shock and a complete return will not take place at least until the summer of next year, Goldman Sachs says, as the U.S. is taking part in indirect talks about the so-called Iran nuclear deal.
"With OPEC+ appearing to manage its exit for now, supply concerns will likely shift to the potential return of Iran to the JCPOA (Joint Comprehensive Plan of Action) agreement," analysts at Goldman Sachs said in a note on Monday, as carried by Reuters.
The United States is engaged in indirect talks about the Iran nuclear deal with diplomats from Europe, Russia, and China in Vienna.
Currently, the U.S. sanctions imposed by the Trump Administration are preventing Iran from exporting all of its oil, as many buyers around the world don't want to risk their U.S. assets by doing business with Iran.
U.S. President Joe Biden has signaled a willingness to return to the nuclear deal, but only if Iran returns to full compliance in its nuclear activities.
"We don't anticipate an early or immediate breakthrough, as these discussions we fully expect will be difficult. But we do believe that these discussions with our partners and, in turn, our partners with Iran is a healthy step forward," Ned Price, U.S. State Department spokesman, said on Monday.
According to Goldman Sachs, reaching an agreement that could lead to the U.S. potentially lifting the sanctions on Iran's oil will likely take months. During that time, the OPEC+ group will monitor these events and will, if needed, tweak policies to accommodate Iranian supply, the investment bank says.
Goldman Sachs continues to be bullish on oil and anticipates strong demand that would require OPEC+ putting another 2 million barrels per day (bpd) on the market in the third quarter, after the around 2 million bpd that the alliance and Saudi Arabia decided to return between May and July.
By Tsvetana Paraskova for Oilprice.com
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Comments
In my opinion, the indirect talks between the United States and diplomats from Europe, Russia, and China in Vienna about the Iran nuclear deal is a waste of time.
Without the United States agreeing first to lift the sanctions on Iran or easing them considerably, Iran won’t even negotiate with the Biden administration. On the other hand, the the United States won’t lift the sanctions without Iran agreeing to renegotiate the nuclear deal and therein lies the rub.
That is why US sanctions will remain in place for some considerable time into the future. Iran isn’t unhappy with the situation as it is managing very successfully to evade the sanctions and is already exporting more than 1.5 million barrels of oil a day (mbd) or 71% of its pre-sanction oil exports with China alone buying almost 1.0 mbd.
The Americans have also to confront the prospect that having successfully managed to mitigate the adverse impact of the sanctions, Iran might even consider their continuation as a small price to pay for forcing an ejection of US military presence from Iraq, Syria and eventually the whole Middle East.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London