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.
