After six months of President Biden in office, and repeatedly dashed hopes at a nuclear deal with Iran, failing to come to an agreement means instead of lifting sanctions the U.S. is considering putting restrictions on oil sales between Iran and China. This week, U.S. officials told the Wall Street Journal that new sanctions could go into effect if Iran does not agree to a nuclear deal. The U.S. hopes that by threatening one of Iran’s most important markets, owing to the current sanctions, it will put pressure on Iran to come to a nuclear agreement sooner rather than later.
The U.S. has been working with European and international partners in Vienna in recent months in an effort to restore the 2015 Joint Comprehensive Plan of Action (JCPOA), reducing sanctions on the country’s oil sales in return for nuclear cooperation.
At present, Iran exports around a million barrels a day of crude to China, in a growing trade route that’s been overlooked by the U.S. as nuclear talks looked increasingly promising. However, the U.S. may persuade Iran’s top importer, as well as another major importer India, to cut imports from the oil-rich state.
However, nuclear talks between the two countries are expected to be on hold until at least August after Iran’s new president, Ebrahim Raisi, is sworn into office at the beginning of the month. After this, a seventh-round of negotiations is expected to take place in Vienna to attempt an agreement on nuclear deal and sanction reductions, according to officials.
Related: Oil Rallies After Poor Open Sanctions have been in place on Iranian oil since President Donald Trump removed the JCPOA in 2018, leading to Iran breaking the agreement’s nuclear covenants in response.
But Iran looks to be in no rush to curb its nuclear activities as Tehran has reached near purity in its enriched uranium, which would make it possible to create atomic weapons, as well as preparing the foundations to bring thousands of centrifuges online in 2021.
Despite nuclear progress, president-elect Ebrahim Raisi has shown enthusiasm around a nuclear deal, which would mean atomic caps and once again abandoning many of the country’s nuclear projects.
But the U.S. and the rest of the world are growing impatient as Iran has been misleading on agreement progress in recent months. Just last month outgoing President Hassan Rouhani's chief of staff Mahmoud Vaezi stated that the U.S. had agreed to remove all sanctions on Iranian oil and shipping.
"An agreement has been reached to remove all insurance, oil and shipping sanctions that were imposed by Trump," Vaezi stated to the Iranian media. "About 1,040 Trump-era sanctions will be lifted under the agreement. It was also agreed to lift some sanctions on individuals and members of the supreme leader's inner circle.
However, in response to the statement, Washington was adamant that no sanctions would be removed until a nuclear deal had been reached.
Despite several delays and more hurdles than expected, U.S. State Department spokesman Ned Price stated, "This process is not indefinite," "There will come a point where our calculus will change, where the gains that Iran is able to make in its nuclear programme, the benefits it accrues might one day outweigh the benefit that the international community would accrue from a mutual return to compliance with the JCPOA."
And the P5+1, US, the UK, France, Germany, Russia, and China are pushing for that agreement to happen under Iran’s new government this August while momentum on a deal is still strong.
By Felicity Bradstock for Oilprice.com
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