Despite it seems that Iran and the US are closer than ever to reach an agreement to reinstate the 2015 nuclear deal, there are also signs indicating that it is too soon to take any deal for granted.
This Tuesday, the European Union announced that it received Iran’s response as the last-ditch effort to revive the nuclear deal and that it was viewed positively by EU officials.
“We have received the Iranian response last evening. We are studying it and are consulting with the other JCPOA participants and the US on the way ahead, the EU spokeswoman for Foreign Affairs and Security, Nabila Massrali, said on Tuesday evening. Positive signs that Iran and US can finally reach to a common ground over the nuclear deal after months of negotiations already affected the oil market. Oil prices dropped Tuesday due to such progress, raising hopes for an influx of more crude supply.
Brent crude fell as much as 2.8% to hit a six-month low, and US oil dropped back below $90 a barrel. By midday Tuesday, Brent crude was down 2.5% at $92.75, and West Texas Intermediate was off 2.65% at $87.03
Extra oil from Iran is crucial and can have great effect on a global scale as Iran is one of the biggest oil producers in the world. Iran holds about 100 million barrels of oil in storage, and energy analysts have estimated the country could add about 1 million barrels a day of production within a few months of sanctions being eased.
The flow of Iran’s oil after the removal of sanctions can very well provide much-needed relief for a global economy that is currently hit by soaring energy costs and the need for more oil production.
Too soon to consider the deal done
Despite positive signs that a nuclear deal is in sight, analysts from Goldman Sachs Group believe that it is unlikely that Tehran and Washington could do so at least not in the near term.
“Our view continues to be that a deal is still unlikely in the short term, with a stalemate mutually beneficial,” Callum Bruce said this Monday, adding that “even with a breakthrough, there would likely be a phased implementation, with barrels unlikely to return until the start of 2023 at the earliest.”
Bruce further noted that “at present obstacles remain, especially regarding so-called continuity guarantees the US is unable and unwilling to provide for Iran.”
By continuity guarantees, Bruce was referring to Iran’s demand that Washington must give written and strong guarantees that even if the next US administration pulls out of the new deal, it needs to pay compensation to Iran.
According to CNN, a diplomat official in the region, has said that it seems there has been progress in bringing views closer, “especially in the issue of indirect sanctions on Iranian companies working abroad,” the diplomat said.
“However,” he explained, “the main issue facing the revival of the deal is the guarantees requested from the Iranian side ensuring Iran will be compensated in case future US administrations decide to withdraw again from the deal and while no real solution has been put forth.”
An adviser to the Iranian negotiating team at talks on the deal in Vienna, Mohammad Marandi, confirmed to CNN on Tuesday that Iran was looking for such guarantees.
Marandi also said in a tweet on Monday that there were “differences” on two other issues, but he declined to offer specifics on the matter. Iran’s foreign ministry spokesman Nasser Kanani also echoed the same view and told reporters on Monday that despite “considerable progress” had been made, “this progress didn’t fully account for the legal demands of the Islamic Republic of Iran.”