Iran’s presidential election raisi stipulates conference bidding, and the oil market looks forward to nuclear agreement

Dubai, United Arab Emirates-Iranian President Ebram Resi held the first press conference since the country’s elections. His priority on Monday was to improve relations with regional neighbors and resume nuclear deals in 2015-and At the same time formally ruled the meeting with US President Joe Biden.

“We support negotiations that guarantee our national interests…. The United States should immediately return to the agreement and fulfill its obligations,” said Raisy, a hardline clergyman who himself was sanctioned by the United States, according to a Reuters translation.

The 2015 Joint Comprehensive Action Plan (JCPOA) lifted sanctions on Iran in exchange for restrictions on its nuclear program.

Under the mediation of the Obama administration, JCPOA lifted sanctions on Iran, which have weakened its economy and cut its oil exports by about half. In exchange for billions of dollars in sanctions relief, Iran agreed to dismantle parts of its nuclear program and open its facilities to wider international inspections.

In addition to the United States, France, Germany, the United Kingdom, Russia and China are also signatories to the agreement.

In 2018, then President Donald Trump kept his campaign promises and unilaterally U.S. withdraws from JCPOA Call it “the worst deal ever.” Trump also re-imposed sanctions previously lifted on Tehran.

After Washington withdrew from the landmark nuclear agreement, other signatories to the agreement have been working hard to maintain the validity of the agreement.

When asked in time at the White House on Monday, press secretary Jen Psaki told reporters that the position of the Biden administration has not changed because the United States has no diplomatic relations with Tehran.

“Well, we currently have no diplomatic relations with Iran, and we have no plans to meet at the leadership level,” Psaki said. “The Iranian nuclear negotiating team has just completed six rounds of talks and has not yet announced the seventh round of talks,” she said, adding that the government is hopeful on the way forward.

Tehran since then Its nuclear activities far exceed the limits of transactions What it is talking about is a protest against sanctions-Washington said that unless Iran reverses its increased nuclear activities, such as increasing uranium enrichment and storage, it will not lift the sanctions.

Although the JCPOA signatories are negotiating and talking about “progress” in Vienna, the two opponents still seem to be deadlocked on major issues, such as Iran’s transparency with regard to nuclear inspectors.

The market is now paying attention to negotiations and Raisi’s information to understand what this might mean for the world’s oil supply.

As a result of Trump’s sanctions, Iran’s oil exports have been cut to only a small part. Iranian Ministry of Petroleum officials said that over time, the resumption of the agreement and the cancellation of tariffs may increase the daily oil production on the market by 3.8 million barrels from the current 2.1 million barrels per day. However, due to insufficient investment in oil fields and declining production in recent years, this may be a long process.

Jason Tuvey, a senior emerging market economist at Capital Economics, a London consultancy, wrote in a report that the agreement “if it is revived, it will provide a substantial boost to the Iranian economy – it may be in 2021-23. Annual growth rate is 8-10% per year”. Pay attention before the election. But he added that its higher crude oil production will put pressure on other dynamics in the region.

“The increase in Iranian oil production will drag down global oil prices and may prompt the governments of the Gulf countries to maintain tight fiscal policies, dragging down the economic recovery,” Tuvi said.

Herman Wang, a senior oil writer at Platts Energy Information, said that if Iran can return to the global oil market, there will be no shortage of demand for it.

“Many of Iran’s former oil customers, especially those in Asia, have expressed their desire to resume purchases as soon as the sanctions are lifted,” Wang said. He added that many refineries in Asia are very suitable for Iranian crude oil. “This will increase the competition from neighboring Saudi Arabia, Iraq, Oman and other heavier and more acid grade producers. Iranian condensate will compete with Qatar’s Similar to condensate competition, the United States and Australia.”

“This is likely to put pressure on oil prices, although OPEC and its allies will hope that the growing demand will mean a bigger cake for everyone,” Wang added.

Edelbel, Head of Commodity Research at Dubai Bank UAE NBD, told CNBC: “At this stage, we are still paying attention to the negotiations between the parties to the JCPOA in Vienna, which are seen as a more important variable in the recent oil price.”

Although Raisi stated that he would support reaching an agreement, “this does not resolve the differences that still exist between the parties to the JCPOA, including the fact that Raisi himself was sanctioned by the United States,” he said.

Bell added: “The timetable for the return of freely exportable Iranian crude oil has been postponed until later in 2021, so we do not see any upcoming return that will help ease the current market tensions.”

The oil market does not seem too worried about the prospect of resuming trading.International benchmark Brent crude oil On Monday, it continued to climb steadily. The trading price at noon in the US Eastern Time was US$74.65 per barrel. This year-to-date increase is 45% and 70% higher than the same period last year.

Bell said that a more pressing long-term issue will be how the Laysie administration will position its relationship with OPEC and its oil-producing allies. If the sanctions are lifted, will Iran accept production quotas, or will it try to expand its market share to make up for the lost time?

Bell said: “Although Iran itself is not enough to push the oil market back to excess this year, competition for market share may push other OPEC+ member states to do the same, and may put downward pressure on oil prices.”

CNBC Amanda Marcias Washington contributed to this report.