Oil price rises with talks over 2015 Iranian nuclear deal progresses at snail's pace

Iran refinery fire

I firmly believe that the rise in oil price in the last two days is more to do with the slow pace of the progress in talks over the JCPOA, 2015 Iranian nuclear deal than the positive outlook of demand in the coming months.

The 5th round of talks, which was considered to be final, ended this week with no sign of the breakthrough that the world expected; it got a boost last week with a presidential optimism: President Hassan Rouhani of Iran said that a deal was close to be agreed upon.

It, however, did not materialise; the Iranian delegates now say that they need more time and the signatories to the deal want more time as well to visit their capitals to consult their superiors. The deputy Iranian foreign minister says that there will be the 6the round of talks – and it will be final.

The crude oil price, meanwhile, has been rising since Tuesday. Last night, however, it dipped slightly, perhaps, at the news that a massive fire had broken out near Tehran, the Iranian capital.

This is the second fire within a period of 24 hours involving Iranian assets: on Tuesday, the largest ship in the Iranian navy caught fire and sank despite an enormous salvage operation. The causes of fire in both cases remain a mystery and Iranians are tight-lipped about it.

Although the chief of the OPEC+ says that the arrival of oil from Iran will be orderly and transparent, there seems to be anxiety among the members over the impact on the crude price, in the event of Iran becoming a legitimate contributor to the global output of crude oil.

Iran, meanwhile, views the impasse in talks in Vienna, having been very close to an agreement, as a sabotage attempt by what it calls ‘West Asian regimes’.

In this context, the substantial threats that exist against Iran on multiple fronts may either make it more stubborn or more flexible in handling the nuclear issue, something that both the West and Iran’s regional rivals consider as an existential threat.

In this rapidly evolving situation, the oscillation of the crude oil price will be at the mercy of geo-political developments involving Iran – in the coming days.

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