Oil Price: the latent influence of talks over 2015 Iran nuclear deal

 

JCPOA-round-five

The volatility of oil price continues despite the encouraging market factors, which usually are strong enough to keep it at a steady level in normal circumstances.

The reality on the ground, however, is puzzling even the veterans in the sectors. Of course, these are not normal times; the pandemic has changed political landscape beyond recognition.

Against this background, it is tempting to speculate the Iranian factor in the game: during the last two weeks, the sentiment of optimism reached fever pitch, when President Hassan Rouhani of Iran provided the crude oil markets with much-needed impetus – an imminent breakthrough that could result in the lifting of the US-led sanctions against Iran.

In inverse proportion to the sentiment, the oil markets reacted; the price of crude oil went down, fearing an oil glut with the supply of Iranian oil flooding the markets.

As the progress of the talks in its latest round, the 5th, in Vienna moved on at a slower pace, the oil price started going up again, only to turn in the opposite way in light of any good news that comes from Vienna on a deal.

At the weekend, an official from the Iranian foreign ministry blamed the impasse on Anthony Blinken, the US Secretary of State and Dominic Raab, the Foreign Secretary of the United Kingdom; the official in question criticising the duo for ‘siding’ with Israel, the country that Iran says wants to ‘sabotage’ a settlement in the JCPOA, Joint Comprehensive Plan of Action, known as 2015 Iran nuclear deal; Mr Blinken and Mr Raab had been in Israel for consultations – and to allay fears of the Jewish state – before the Iranian statement was made.

Last week, the latest round of talks was branded as the 5th and the final. Both sides, however, now say it is wrong to flag it as the last.

The Iranian officials, however, show both the optimism for a success and determination to see it through for obvious reasons: Iran cannot go on this way for an indefinite period of time, as the sanctions have been biting every sector; it has a serious issue with water shortages; the electricity grid is in dire need of investment to rectify regular power outages; in short, Iran has to sell its oil to address a catalogue of burning domestic issues.

The Iranian foreign ministry official said that his delegation continues talks with ‘meticulousness’ to achieve its goal. If Iran pushes the ‘meticulousness’ too far, however, the talks may lose weeks of progress and Iran in no way be in a better position; Iran is not in possession of a leverage in order to advance talks in its favour at present.

In this context, this week will be crucial for both the signatories of the JCPOA and those who watch crude oil markets, if they stubbornly stick to their guns.

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