Russia backs down on demands in Iran nuclear deal talks, making revival of 2015 pact imminent
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The picture shows an Iranian flag inside Iran’s Bushehr Nuclear Power Plant. This was captured during an official ceremony for the launch of a second reactor.
AFP via Getty Images| AFP via Getty Images
Russia is stepping back from its threats to derail the 2015 Iranian nuclear accord’s revival, following recent sanctions it imposed on Ukraine for the invasion. The move reopened the door to an agreement almost one year after talks.
The parties to the agreement, also known as the Joint Comprehensive Plan of Action or JCPOA were close in reaching a compromise in Vienna. However, sanctions were placed by the U.S., EU and other countries on Russia following its invasion of Ukraine. Moscow demanded that Iran’s future trade not be affected by Western sanctions. The talks were then suspended last week.
Russian Foreign Minister Sergei Lavrov stated Tuesday that he received written assurances from the U.S. that his demands would be fulfilled. This means that talks are likely to proceed. An agreement is possible thanks to the nearly simultaneous release by British and Iranian dual nationals of Iranian years-long detention back in the U.K., as well as a U.K. reported repayment of Iran’s decades-old $530m debt.
“Deal could come together quite quickly — potentially as soon as this week,” analysts at political risk consultancy Eurasia Group wrote in a note Wednesday.
Analysts wrote that Russia’s willingness to compromise its demands removes the biggest obstacle in the way of JCPOA revival. They put the chances of an agreement passing at a optimistic 80%. They stated that the release of two British-Iranian prisoner is another sign that negotiations are on their way to a successful conclusion.
Iranian oil now back on market
With the U.S. terminating its imports of Russian oil and the EU looking to reduce its energy dependency on Moscow, Iranian crude is looking more alluring — as is the crude from other heavily sanctioned countries like Venezuela, which has reportedly been in energy discussions with U.S. officials.
Recalling the 2015 deal that originally lifted sanctions from Iran in return for its nuke program limits would allow Iran to resume oil trading at a time of energy scarcity and volatility, when crude prices have been the highest since more than 10 years.
The move would boost global oil supply and put down prices,” James Swanston (Middle East and North Africa economist, Capital Economics) wrote Thursday. He also noted that it could help ease tensions within the region. However, it will be a long time before production returns to their previous levels.
Analysts in commodities S&P Global Platts predictIf sanctions against Iran were lifted immediately, Iran could export an additional 500k barrels per daily to the markets between April and May this year. This figure will rise to 1.3 million barrels by year’s end.
Iran was the fifth largest producer of oil in OPEC for 2020. Prior to the Trump administration’s unilateral abandonment of the 2018 deal and the reimposition of crippling sanctions against Iran’s economy in 2020, Iran was still producing around 3.8million barrels of oil per daily. This later dropped to as low as 1.9 million barrels and is currently about 2.4 million barrels per day, according to the Atlantic Council — though most of this has had to remain in storage rather than be exported due to the sanctions.
The Iranian government has made substantial progress since withdrawing from the accord. increasing uranium enrichment and stockpiles far beyond the parametersThe 2015 agreement.
The Iranian government has reduced the “breakout time,” which refers to how long it takes to create a nuclear weapon. Iran’s leadership stated that its progress would not stop if the U.S. sanctions don’t get lifted.
Washington’s Gulf allies are not happy
Eleven months have passed since negotiations were restarted. While the U.S. and Iran did not speak directly with each other, they used European mediators to communicate their differences. These issues mostly concern sanctions, specifically whether Iran’s Islamic Revolutionary Guard Corps will be kept on the U.S. Foreign Terrorist Organization (FTO) list.
Eurasia analysts state that “but these are unlikely prove to be insurmountable” given Washington’s and Tehran’s desire for a deal.
Washington’s Arab Gulf allies have not been happy with the prospect of a reopening of the agreement, especially Saudi Arabia and United Arab Emirates. These two countries are OPEC’s largest crude oil producers, and also long-standing enemies of Iran. They reportedly refused President Joe Biden’s requests to boost their oil production to help with soaring costs.
OPEC has yet to indicate any plans for increasing its production beyond the pre-planned increases that were agreed among OPEC members, and non-OPEC allies. Russia is leading this effort.
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