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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