The Iran nuclear deal seems to be coming to an end, and according to statements is heading for a positive outcome.
“Closer than ever,” Ali Bagheri Kani, Iran’s chief nuclear negotiator, described the progress of a possible deal on Wednesday.
This was also confirmed by parts of the Western negotiating partners and also from the American side Ned Price, spokesman of the State Department, confirmed that the talks are on the final stretch.
“Our assessment is that we are in the midst of the very final stages of, as I said before, a complex negotiation with the key stakeholders here,” adding, “This is a decisive period during which we’ll be able to determine whether a mutual return to compliance with the JCPOA [Joint Comprehensive Plan of Action] is in the offing or if it’s not,” said Price.
From the French side, the ball is now in the court of Iran’s representatives, who, according to French Foreign Minister Jean-Yves Le Drian, must now make a “political decision.”
“We need political decisions from the Iranians. They have a very clear choice. Either they unleash a serious crisis in the next days […] or they accept an agreement that respects the interests of all the parties, especially those of Iran,” according to Le Drian
A positive outcome of the talks could ease the tight oil markets somewhat, especially in view of the situation in Ukraine. With the lifting of sanctions, Iran could again participate in global oil exports, which according to estimates could increase supply by 3.8M barrels per day.
Analysts at ING estimate Iranian oil production at 2.5M barrels per day at the moment, but capacity is said to be 3.8M barrels per day.
“Iran is currently producing at around 2.5MMbbls/d but is estimated to have a capacity of closer to 3.8MMbbls/d. Therefore, over time there is the potential for 1.3MMbbls/d of additional supply to come onto the market. This would only reinforce our current view that oil prices should trend lower through the year,” ING reported.
So in the short term, oil prices could stay high or go up, but by the end of the year, oil prices could go down again. The main factor will continue to be the supply on the market, with possibly Iranian oil coming back onto the world market and OPEC getting its production under control.