Crude Oil Price: OPEC+ members are anxious about the arrival of Iranian oil - top Russian oil executive

 

Iranian oil

Although the crude oil price rose this week, the anxiety over flooding the markets with Iranian oil still has the potential to rattle the sector in the next few days.

The signatories to the JCPOA, Joint Comprehensive Plan of Action, also known as 2015 Iran nuclear deal, are going to meet up again in Vienna, the Austrian capital, next week, after a 10-day break for consultations with their respective governments.

They already have had five rounds of talks with the anticipated breakthrough not being in the offing; they, however, have ironed out many thorny issues and the optimism at the negotiation table had never been higher.

Iranians, meanwhile, feel that some regional powers do not want a deal being struck; Iranian media identifies the ‘saboteurs’ as ‘West Asian regimes’.

The success of reaching an agreement in the talks in the next round, however, is strong: the Iranian rhetoric that we witnessed at the beginning of the talks is on the wane; they have opened up he diplomatic channels with their Western counterparts again; the Iranians desperately want to sell their oil and get their market pillars in place in order to address many burning domestic issues, ranging from rampant inflation to shortages of water and electricity.

Although the OPEC+ officially said that they did not discuss the prospect of the arrival of Iranian crude oil to the markets – and its potential impact – the former made it clear that the members want the process be orderly and transparent, implying that opacity was not acceptable.

The members of the OPEC+, however, seem to be worried about the Iranian factor, despite putting on a brave face.

Leonid Fedun, the vice president of Lukoil Company, a Russian oil giant, for instance, did not hide the lingering anxiety this week in an International Economic Forum in Russia: “If sanctions are lifted, Iran will be able to offer up to 1.5 million barrels of oil per day to the market in the near time,” while adding, "shortage may turn into surplus. That is why OPEC is so cautious in all its actions."

Iran never shied away from the fact that it is boosting its oil production in the hope that the sanctions will be lifted much sooner than expected; Iranian oil minister is on record saying that Iran can easily provide the markets with 6 million barrels per day – far higher than the near-time estimate of the Russian official.

Against this backdrop, analysts and traders are closely monitoring the success of the talks on 2015 Iran nuclear deal.

Although Iran will not take economically suicidal steps as far as oil producers are concerned, the misplaced anxiety of the members of the OPEC+ has steadily permeated beyond the block’s officialdom, casting an ominous shadow over the market watchers.

The recent fluctuations of the crude oil price, in this context, have been at the mercy of Iranian factor while dwarfing the positive influence of many favourable factors.

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