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.
