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Analyst: Iran’s Oil To Return To Market In August At The Earliest

If the ongoing talks about the U.S. and Iran returning to the nuclear deal result in an agreement, it will be in August at the earliest that Iranian barrels will hit the market free of American sanctions, Amrita Sen, head of research at Energy Aspects, told Bloomberg Television in an interview on Wednesday.

Iran, the U.S., and the remaining participants in the Joint Comprehensive Plan of Action (JCPOA) started on Tuesday the fifth, and what Russia hopes will be the last, round of talks.

According to Energy Aspects’ Sen, both the United States and Iran will aim to reach a deal before the presidential election in Iran on June 18.

Even if a deal is announced as early as next week, it will take at least another two months for Iranian oil to start flowing to the market with the blessing of the United States, she said. This is because the Biden Administration will likely send any deal reached to Congress, which has 60 days to review it. The Administration could, in theory, bypass Congressional review, but Energy Aspects analysts don’t think it will do so, Sen added.

Then, the United States will wait for Iran to return to compliance in its nuclear activities, and only then will it issue waivers or lift sanctions, she noted.

So the earliest possible timeline is Iran’s oil returning in August, but probably later on in the year.

The later Iranian oil returns, the less impact it will have on the oil market because analysts and forecasters expect global oil demand to rebound strongly in the second half of this year.

OPEC+ is well aware of the possibility of Iranian exports adding to global supply and will estimate balances of supply and demand considering Iran, Russia’s Deputy Prime Minister Alexander Novak said on Wednesday.

Iran will not be put under the OPEC+ quota immediately after its return to the market, according to Energy Aspects.  

Meanwhile, Iran may have some 69 million barrels of oil in floating storage waiting on tankers to travel to buyers when U.S. sanctions on its crude oil exports are removed, estimates from E.A. Gibson Shipbrokers cited by Bloomberg showed on Tuesday.

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on May 26 2021 said:
    The analyst is totally wrong. We may never see a lifting of US sanctions on Iran even by 2023 or ever. The reason is that the positions of the United States and Iran are irreconcilable.

    Even if an agreement was reached before the Iranian presidential elections in the 18th of June (which I don’t believe for one minute that it will happen), it will have no impact whatsoever on the outcome of the elections. Supporters of the Islamic Revolutionary Guard Corps (IRGC) are going to have a landslide victory in the presidential elections.

    The claim that Iran may have some 69 million barrels of oil waiting on tankers to travel to buyers when U.S. sanctions are lifted is of no consequence for the global oil market since it amounts to only 69% of one-day global consumption and just one month’s pre-sanction exports of Iranian crude oil. Moreover, they won’t be introduced into the market at one go.

    If in the very unthinkable possibility the sanctions were lifted, Iran could only bring 650,000 additional barrels a day (b/d) to the market. The reason is that Iran has been managing with help from China to export 1.5 million barrels a day (mbd) or 71% of its pre-sanction exports of 2.125 mbd. A global economy projected by the IMF to grow this year by 6.3% could easily absorb the 650,000 extra Iranian barrels without any impact on oil prices.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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