Iran nuclear talks return may be months away: Minister

Market: Crude oil
31/08/21

Iran's new foreign minister has hinted that the country's return to the nuclear-deal negotiations could be months away, potentially pushing back any restoration of the country's crude exports.

Hossein Amir-Abdollahian, in comments reported widely in Iranian state-owned media, said: "The other side understands that it will take two or three months for the new government in Iran to be established and be able to plan."

Iran's new President Ebrahim Raisi has said that his government would support any initiative that works towards the ending of US sanctions, but Amir-Abdollahian's remarks are the first suggestion of when that might be. The possibility that Tehran may not return to the table until late in the year will do nothing to assuage the unease that has been expressed recently by the European parties to the nuclear deal (E3), and could keep any increase in Iranian crude exports off the market until next year.

Talks to bring Iran and the US back into compliance with the deal — known formally as the Joint Comprehensive Plan of Action (JCPOA) — began in April under Tehran's previous government and were suspended following Raisi's 18 June election win. The negotiations, which have seen Iran and the US in contact only indirectly, have hit deadlock over several key points, among them a US request that Iran commits to follow-up talks on other contentious issues and an Iranian request that the US guarantees it will not unilaterally exit the deal again in future.

"While refusing to negotiate, Iran is instead establishing facts on the ground that make a return to the JCPOA more complicated," the E3 said this month. "We urge Iran to return to the negotiations as soon as possible with a view to bringing them to a swift, successful conclusion."

Amir-Abdollahian said that Iran is "not seeking to escape from the negotiating table" but that the new government wants a change in approach. "We do not accept the approach of wasting time, and the results must have tangible results in the interests of the Iranian people," he said.

A mutually-agreeable end to the JCPOA talks would lift some US sanctions on Tehran and mean that Iran could resume exporting crude without hindrance. At one point the US actions removed more than 2mn b/d of Iran's oil from the market and forced its production below 2mn b/d — a level not seen since the start of the Iran-Iraq war in the early 1980s. This recovered to 2.44mn b/d in July, according to Argus estimates, and Tehran should have little problem increasing exports fairly rapidly given the amount that is stored offshore.

How much there is to return to export markets is unclear. Last week tanker operator Frontline said that the amount of sanctions-busting trade in crude — from Iran and Venezuela — "seems to be taking place on a scale which both severely hurts the demand for freight in the compliant tanker market and distorts the global oil trade, displacing significant volumes of compliant oil".

By Ben Winkley

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