BAKU, Azerbaijan, Aug.17
By Leman Zeynalova – Trend:
Shortfall in anticipated Iranian exports will push oil prices to $80-81/bbl, Trend reports with reference to the US JP Morgan Bank.
Iran and the US continued engaging in nuclear talks with no meaningful repercussions to a more overt commercial relationship between China and the Islamic Republic. But since the last round of US-Iran nuclear talks ended on June 20, progress has stalled, with no announcement about when the seventh round of negotiations might begin. Concerns that a return to the negotiations might not be possible have arisen as twin attacks on shipping routes in the Persian Gulf escalated tensions in the region and as the country’s new hardline president, Ebrahim Raisi, nominated a conservative Foreign Minister veteran with ties to the Islamic Revolutionary Guard Corps to replace Mohammad Javad Zarif as the nation’s top diplomat. Recognizing the shift in power that is hampering the resumption of nuclear talks, the Biden administration is now reportedly willing to consider alternatives like an interim step of limited sanctions relief in exchange for Iran freezing its nuclear work. Our view on Iran has largely been agnostic to the timeline around Iran-US negotiations, recognizing that Iran began scaling up its production and exports since the US elections last November and has so far restored 600 kbd of its mothballed volumes. Despite the lack of an agreement, Iran pumped 2.52 mbd in July, its highest since April 2019. And while Iranian exports of crude and condensate have come off the highs, they nevertheless remain near 1 mbd with S&P Global Platts forecasting exports to grow to 1.3 mbd by December and 1.7 mbd by March 2022. Absent full sanctions relief, exports could stay at around current levels, potentially removing 0.5-0.7 mbd from the market’s expectations around the scale-up in Iranian output. As OPEC+’s spare capacity falls from 5.1 mbd in July to 3.2 mbd by December, with 90% in the Middle East, this shortfall in anticipated Iranian exports would be enough to likely push oil prices to $80-81/bbl.
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