We may be about to see a surge in oil from Iran. That’s the hope, at least, surrounding talks in Vienna aiming to revive the 2015 nuclear deal, also known as the Joint Comprehensive Plan of Action. Sanctions on Iran were first removed in 2016, after a deal was struck to limit the Persian Gulf nation’s nuclear program, only to be reinstated when former President Donald Trump. If sanctions are lifted once more, the country will be able to boost its oil production and unlock a wave of barrels stored in onshore tanks and on ships anchored around the world. That could help reverse some of the recent rise in crude prices and take pressure off motorists faced with the highest fuel prices they have seen in more than seven years.
The talks between Iran and a group of six nations — the U.S., China, Russia, the U.K., France and Germany — have been going on for months and are heading for the finish line, according to a senior European Union diplomat. But what lies beyond the tape remains unclear, and there are still some political obstacles to overcome. Chief among these for Iran is a guarantee that future U.S. administrations won’t simply revoke the deal again. That’s something President Joe Biden, or any other U.S. leader, can’t promise, particularly when doing a deal with Iran remains unpopular for many members on both sides of Congress. If it wants an agreement, Iran is going to have to be realistic. It may yet decide that accepting a deal that could last as little as three years simply isn’t worth it.
On the other side of the table, major differences remain on what’s required to roll back Iran’s nuclear advances — which have allowed it to enrich uranium closer to weapons-grade levels and near the threshold of becoming a nuclear state. There seems to be a general acceptance that time is running out to do a deal before Iran’s capabilities have developed so far as to make the 2015 agreement meaningless.
But if a deal is done it could have big implications for oil markets and a knock-on effect on fuel prices. When sanctions were eased in 2016, after the nuclear deal first came into effect, Iran boosted its oil production much more quickly than consensus forecasts. Most analysts saw the country’s crude production rising by 500,000 barrels a day over the first 12 months without sanctions. In fact, Iran achieved that in less than four months and went on to add almost the same amount again before the year was out. There are reasons to think it might be able to do the same again.
If an Iranian nuclear deal can be revived, the extra barrels it will release onto the global market will come at just the right time and will move quickly. The OPEC+ group of oil producers is struggling to boost production as much as it’s promised, and the Texas shale patch shows no sign of riding to the rescue. It might be down to longtime foe Iran to come to U.S. motorists’ aid.