Nuclear talks resume in Vienna after Iran elects hardliner Raisi as president

2021-09-23by admin

  World powers resumed another round of nuclear deal negotiations with Iran on June 20, a day after hardliner judiciary chief Ebrahim Raisi won presidential elections that could see the sanctioned OPEC producer seek to increase oil output this year.

  Several weeks of talks have failed to achieve a breakthrough on the Joint Comprehensive Plan of Action, which would relax sanctions targeting Iranian oil sales in exchange for nuclear program concessions.But some analysts say that with the presidential race now decided, progress towards a deal could move forward, with the negotiations stalling due to Iranian Supreme Leader Ali Khamenei not wanting to provide a boost to moderate candidates.

  Although Raisi is not viewed as particularly friendly towards the West, the hardliner has said he is committed to the JCPOA, and the diplomatic efforts to restore the pact has been endorsed by Khamenei, who controls all state affairs.

  ”The election might … unstick ‘indirect’ talks in Vienna, Austria, regarding US re-entry into, and renewed Iranian compliance with, the Joint Comprehensive Plan of Action,” ClearView Energy Partners said in a June 19 note. “We do not believe Iran would be at the table at all unless Supreme Leader Khamenei and Iran’s ruling mullahs had green-lighted a return to bargain. In other words, we have little expectation for talks to collapse.”

  Raisi, a 60-year old cleric who is seen as most favored to become supreme leader after Khamenei, won a landslide election marked by a 48.8% turnout, the lowest in the country’s history.

  His top energy adviser Alireza Zeyghami, a former deputy oil minister, told S&P Global Platts that under Raisi, Iran would seek a quick return to its pre-sanctions crude production of near 4 million b/d, with or without a nuclear deal.

  However, many buyers of Iranian crude remain wary of incurring sanctions penalties and are awaiting the restoration of the JCPOA.

  Much of Iran’s production is of heavier grades, which compete directly with crudes from Saudi Arabia, Iraq, Russia, Oman, Kuwait, Venezuela and Mexico, among others

  Iran also exports ultra-sweet low sulfur oil or condensates, which is similar to grades produced by Norway, Qatar, the US and Australia.

  Race for a dealKhamenei appointed Raisi to his high-profile job of judiciary chief in 2019, the year he was placed under US sanctions over human rights violations

  He will succeed Hassan Rouhani, a more moderate president, who will step down in August after serving two terms. Now, Rouhani’s last meaningful act in office may be to clinch a JCPOA deal before Raisi is inaugurated.

  Countries that are party to the 2015 nuclear deal, which set a limit on Iran’s uranium enrichment levels at 3.67%, are meeting in Vienna to try and hammer out an agreement.

  The US, under President Joe Biden, had hoped the talks, which include representatives from Russia, Germany, UK, China and France, would conclude before the Iranian elections.

  ”Right now, we are the closest to an agreement than ever before,” Iran’s top nuclear negotiator Abbas Araghchi told state television before the start of the June 20 talks. “But the gap between us and the agreement is not easy to fill.”

  The indirect talks between Iran and the US in Vienna, which kicked off April 9, have featured Iranian threats of further increasing uranium enrichment levels and a stalemate over implementation of the deal. Iran has insisted that the US relax sanctions first, since it unilaterally withdrew from the deal in 2018 under President Donald Trump, while the US wants Iran to return to full compliance with the JCPOA before earning sanctions relief.

  Iran started 60%-purity enrichment in mid-April, ratcheting up pressure on the US.

  ”An agreement on restoration of the nuclear deal is within reach but is not finalized yet,” Mikhail Ulyanov, Russian envoy in Vienna, said on Twitter June 19.

  The June 20 meeting “will decide on the way ahead at the Vienna talks,” he added.

  Iran’s oil futureS&P Global Platts Analytics expects that a JCPOA agreement could lead to sanctions relief by September, which would boost crude and condensate exports to 1.5 million b/d by December, from 600,000 b/d in May.

  However, Khamenei’s “mistrust of US intentions after the JCPOA backfired remains the largest obstacle, so a deal may admittedly never get done,” Platts Analytics said in a June 17 note. “But he appears to desire sanctions relief if no concessions outside the JCPOA are required, in line with the US’ initial goal.”

  Iran, which used to be OPEC’s third biggest producer in 2017, pumped 2.43 million b/d of crude oil in May, according to the latest S&P Global Platts OPEC+ survey, down from a pre-sanctions high of 3.83 million b/d in May 2018.

  But that is up from 1.98 million b/d in July 2020, as Iran has found some willing buyers, particularly in China, according to market sources.

  Oil minister Bijan Zanganeh, who has said he will not continue with the next government, has advised a production target 6.5 million b/d by 2040, though close aides to Raisi say his administration may instead focus on ramping up refining and petrochemical production capacity, to reduce sanctions-vulnerable crude exports.