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EU stance on Iran deal crucial to oil prices

Business Materials 27 October 2017 13:38 (UTC +04:00)
How the European Union approaches the Iran deal, aka Joint Comprehensive Plan of Action (JCPOA), will determine whether the future oil market will see fluctuations, an oil expert believes.
EU stance on Iran deal crucial to oil prices

Tehran, Iran, October 25

By Mehdi Sepahvand –- Trend:

How the European Union approaches the Iran deal, aka Joint Comprehensive Plan of Action (JCPOA), will determine whether the future oil market will see fluctuations, an oil expert believes.

"Most institutes working in the field of energy have estimated that crude prices will hover around $50 per barrel in the year to come, but of course that is for situations when nothing special, like any political upheaval, happens," Mohammat Ali Khatibi, the former Iran representative in the Organization of Oil Exporting Countries, told Trend October 25.

A newly drafted legislation by US Congress would set tough new terms for JCPOA, including restoring sanctions if Iran tests a ballistic missile able to carry a warhead or bars nuclear inspectors from any sites.

The draft was in the works on Oct. 13 when President Donald Trump announced he would not formally certify that Tehran was complying with the international nuclear pact, and called on Congress to write legislation to toughen it.

The 2015 deal lifted sanctions on Iran in return for limiting the country’s nuclear program. Under sanctions, Iran’s oil export had dropped to 1 mbpd. After sanctions were lifted, it surged back up to over 2 million.

In the meantime, Trump’s vows to pull out of the Iran deal has been harshly criticized by European Leaders. However, the leaders have been in unison with Washington regarding Iran’s missile program.

"If the EU remains with Iran and does not follow the US on Iran deal, then things will stay as they are, that is, since Iran has no oil exports to the US, any unilateral sanctions by Washington would not alter Iran’s presence in the oil market," Khatibi noted.

"However, if the EU, as a customer of Iran crude, follows Washington in posing sanctions to Iran, then we would have to expect lesser presence of Iran in the oil market."

Things do not end there, the former Iranian OPEC representative stated, adding a change in global crude prices will occur if other oil exporters do not seize Iran’s absence to boost their exports.

"It is usually so that the West negotiate with some oil producers to make up for any such supply dives. Therefore, if Iran is taken out of the market and then the oil is replaced from elsewhere, prices will still remain as they are."

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