Two key meetings are going to take place next week
that will be crucial to crude oil markets in the long run.
In Vienna, the Austrian capital, the meeting of the
signatories of the JCPOA – Joint Comprehensive Plan of Action – also known as
2015 Iranian nuclear deal will resume next week.
Having started the discussions recently on the
subject, the delegates were back in their respective countries for
consultations. They will be back in Vienna next week at a time, when the onset
of gloomy outcome is on the wane.
Although Iran stubbornly refuses to meet the US
delegation, it still wants the US to lift the crippling sanctions; according to
some reports, Iran wants 1600 sanctions to be lifted – all at once.
When President Trump was in power, he used to impose
sanctions on Iranian institutions, individuals and even the Supreme Leader,
Ayatollah Ali Khamenei, on regular basis as if he was turning a screwdriver clockwise; not many people did
know that they were tantamount to 1600 in total - in a period of little over
two years.
In a surprise move, Hassan Rouhani, the Iranian
president, said recently that the US appeared to be serious about the negotiations,
while referring to the progress made until that time; he, however, still wanted
the US to do more in terms of reversing the sanctions.
According to the US media that are familiar with the
current phase of discussions, the US is prepared to lift some sanctions such as
that target the oil sector and those of finance.
The sanctions against the Republican Guards corps
and the Supreme Leader are still under discussion, according to the same source;
the general sentiment is that they may evolve too in the coming weeks.
The opposition against the sanctions, meanwhile, is
growing among the Republicans in the US; they may even try to derail the momentum
through the Congress at some point.
Israel, Iran’s greatest foe in the region, meanwhile,
wants a complete revision of the nuclear deal; they have been opposing it in
its current form since its inception. They raise their objections in proportion
to the scale of optimism that emerges from Vienna involving the discussions.
The talks may drag on for an extended period of time
with both sides easing their rigid positions; it may still be difficult for
both sides to reach a consensus about the enriched uranium that Iran has in its
possession at present and the state of centrifuges used for the purpose.
The talks between Iran and the signatories of the
JCPOA are keenly watched by the crude oil markets for obvious reasons; because,
Iran can make a significant contribution to the global crude oil supply.
Before the sanctions were imposed on Iran, it used
to produce 2.5 million bpd; due to sanctions, it fell down to a figure,
somewhere between 100, 000 to 200, 000 bpd.
Those who track oil tankers and ships through
satellites, meanwhile, say that Iran still sells about 500,000 bpd despite the
sanctions; China, which is supposed to be a major buyer of Iranian oil, never
denied that it was on a buying spree.
The other key meeting that takes place next week is
that of OPEC+; the ministers of the OPEC+, including Russia, are meeting
virtually on monthly basis so that they can discuss the steps to be taken in
order to keep the oil price at a sustainable level; they have been just using
the most basic law in economics – balancing supply and demand.
According to Alexander Novak, the Russian deputy
prime minister, the members will just look at how to ‘tweak’ what they came up
with last month; apart from that, judging by his tone, it is highly unlikely that
there will be a major change in the course of action, when it comes to
production quota.
In this context, the oil price will remain
relatively steady, while being subjected to minor fluctuations that stem from
market reactions to the rising infections of the Covid-19 in Asia.
