Oil prices fell by 2% early on Tuesday as talks for bringing Iran and the United States back to the so-called Iranian nuclear deal entered a crucial final stage in Vienna amid signs that progress may have been made.
As of 10:32 a.m. EST, WTI Crude had dropped below the $90 a barrel mark and traded at $89.58, down by 1.91% on the day. Brent Crude had eased from the seven-year high of $93 and was down 1.88% at $90.93, just as diplomats from Iran and the countries still in the Joint Comprehensive Plan of Action (JCPOA) resumed talks on Tuesday to try to salvage the deal. The talks are in a crucial final stage amid pressure for results.
Oil market participants will closely watch the talks for clues about progress, considering that reviving the deal would lead to the United States removing the sanctions on Iranian oil exports.
In a potentially positive sign of progress, the U.S. Administration restored sanction waivers on Friday, allowing Iran international cooperation for civil nuclear purposes. This was interpreted as a positive signal from the so-far difficult talks, which, if successful, would lead to the U.S. removing sanctions on Iranian oil exports.
If a deal is reached in the talks, it could reverse the oil price rally of the past few weeks. Expectations are that this would be the final round of talks for trying to revive the deal, and it would end with either a deal or a "nuclear crisis." The U.S. has signaled that there isn't much time left for an agreement before Iran advances in its nuclear weapon efforts.
A return of Iran's legitimate oil exports would bring relief to the tight oil market and to rallying oil prices. Most analysts do not expect Iranian barrels back to the market in the second quarter, but later this year, we could see a ramp-up in Iranian oil exports, provided-of course-that the ongoing talks are successful.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
Comments
A lifting of US sanctions against Iran will never see the light of day now or ever because the positions of the United States and Iran are irreconcilable.
The only nuclear deal Iran will accept is one on its own terms meaning a lifting of all sanctions against it first with no new limitations to its nuclear and ballistic missile development programmes. This the United States and its allies will never accept and therein lies the rub.
If in the very unthinkable event US sanctions were lifted, the maximum Iran could bring to the global oil market doesn’t exceed 650,000 barrels a day (b/d) being the difference between pre-sanctions and post-sanctions crude exports.
Iran has never managed to achieve a production of 4.0 million barrels a day (mbd) being the production quota allocated to it in the early 1980 when OPEC introduced the production quota system.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London