Rumors that Venezuela is preparing…
Russia, Crude Oil, OPEC+, Black…
The National Iranian Oil Company (NIOC) will change from January 1 the benchmark against which it prices its crude for Europe and the Mediterranean—a move which traders tell Argus could signal Iran’s intention to return to exporting its oil to Europe.
As of January 1, 2022, the state-controlled oil firm of the Islamic Republic will use the ICE Brent settlement for pricing the crude it would sell to the European and Mediterranean markets instead of the ICE Bwave benchmark, Argus reported on Monday, quoting NIOC’s January pricing formulas.
Currently, no refiner in Europe buys Iranian crude oil, as no one risks incurring secondary sanctions from the United States for dealing with Iran’s oil. The U.S. re-imposed sanctions on Iran’s oil, shipping, and banking industries in 2018, when former President Donald Trump withdrew from the so-called nuclear deal.
China is Iran’s main crude oil customer, despite the U.S. pressure on all crude buyers not to deal with the Islamic Republic.
According to traders who spoke to Argus, the benchmark change for European crude sales could signal that Iran intends to resume exports when—and if—the ongoing talks on the deal result in the lifting of the U.S. sanctions.
The indirect talks between the U.S. and Iran on potentially returning to the deal were adjourned ahead of the Iranian presidential election in the early summer.
Related: Saudi Arabia Set To Book Its First Budget Surplus In 10-Years As Oil Rises
Talks resumed early this month, but after the first week of negotiations, both the U.S. and Iran were pessimistic about a successful outcome soon.
Currently, it looks like a possible successful outcome is months away, and a legitimate return of Iranian barrels to the oil market, further still.
Last week, Germany said that Iran should return to the talks with realistic proposals that don’t breach previously reached compromises.
Talks resumed for another round last Thursday, and the U.S. signaled it was ready to “turn to other options” if diplomacy fails.
“We believe a diplomatic resolution offers the best path to avoiding a nuclear crisis. However, given the ongoing advances in Iran’s nuclear program, the President has asked his team to be prepared in the event that diplomacy fails and we must turn to other options, and that requires preparations,” White House Press Secretary Jen Psaki said last Thursday.
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com:
Charles is a writer for Oilprice.com