Looking ahead: Can the negotiations on the Iranian nuclear agreement be reached in the eighth round? 2 million barrels per day of massive crude oil is about to return to the global market?

If there is any international event that can attract the attention of the global people at present, the first is the Ukraine crisis, and the second is probably the negotiation between Iran and the United States and other relevant parties on resuming the Iranian nuclear agreement
.

Negotiations between the parties to the JCPOA in Vienna

Unlike previous rounds of relatively brief rounds of negotiations to resume the Iranian nuclear agreement, the eighth round of talks, which officially opened in Vienna on February 8, has entered its 12th day, releasing news that "negotiations have almost reached an agreement and do not rule out the possibility
of reaching an agreement within a few days.
" ”

Can the eighth round of negotiations really allow the old rivals of the United States and Iran to put aside their past grievances and reach a historic settlement again? Moreover, once the United States relaxes the "gate" of sanctions, Iran has the ability to resume the supply of crude oil to the international market by 150~2 million barrels / day (75 million tons ~ 100 million tons / year)
in a short period of time.
Will Iran's crude oil cause "flooding" in the international oil market?

1.
Previous: In recent years, the United States has continuously increased sanctions against Iraq

The implementation of the Iranian nuclear agreement has reached a dead end

In July 2015, Iran reached a historic nuclear agreement with the United States, the United Kingdom, France, Russia, China, and Germany to lift sanctions on Iran, known as the Joint Comprehensive Plan of Action (in the end, it was actually reached through bilateral negotiations between the United States and Iran, and the role of other countries was very limited and could only "beat the drum").

In May 2018, the Trump administration unilaterally withdrew from the Iranian nuclear agreement, and subsequently revived and added a series of new sanctions
against Iran.
In May 2019, the United States re-imposed "secondary sanctions" on Iran, involving almost all important fields such as military, aviation, energy, automobiles, and finance, and all multinational companies in the world are not allowed to have any dealings with Iran in the above areas, otherwise they will face the "long-arm jurisdiction"
of the United States.
Since May 2019, Iran has been-for-tat, gradually suspending the implementation of some provisions of the JCPOA, but promising that the measures taken are "reversible"
.

With Biden in power, the Democratic government began to adjust
its policy toward Iran.
In April 2021, the parties to the Iranian nuclear agreement began to hold negotiations in Vienna, the Austrian capital, to discuss the resumption of compliance between the United States and Iran, and the United States is indirectly involved in the negotiations
.
So far, seven rounds of negotiations have been completed, and the initial frequency is very high, with each round lasting about
a week.

For example, the sixth round of negotiations began on June 12 and ended
on June 21, 2021.
The seventh round of negotiations began in early December 2021 and ended
on the 17th.
After the seventh round of negotiations, the EU, Iran, China, Russia and other sides positively evaluated the results of the negotiations, while the United States, Britain, France, Germany and other sides showed frustration and pessimism
.

The reason why there have been many rounds of "tug-of-war" in the negotiations is mainly the question of which the United States and Iran will take the
first step.
Iran's position is that the United States must lift all sanctions (including those on powerful sectors and areas such as the Iranian Revolutionary Guard Corps) before Iran can stop its activities to enrich uranium, which is the key to developing nuclear weapons; The U.
S.
position is just the opposite, you Iran must first stop the development of nuclear weapons, I can lift the sanctions against you
.
In this way, the two sides argue over who to give in first, and the atmosphere of negotiations is sometimes relaxed and hopeful, and sometimes the outside world feels obstructed and long, because the positions of the two sides are irreconcilable and the gap is too large
.

At the end of the seventh round of negotiations in mid-December last year, the outside world also judged that the gap in the positions of various parties on the outcome of the negotiations indicated that the next stage of negotiations may become more
difficult.

Here's a brief breakdown of the timeline of events in the JCPOA:

In July 2015, during the term of the Oba President Ma, the six countries on the Iranian nuclear issue reached the Iranian nuclear agreement with Iran.

In May 2018, then-US President Donald Trump withdrew from the JCPOA in person
.

In August 2018, the United States opened sanctions against Iran in the fields of finance, metals, minerals, and automobiles
.

In April 2019, the United States announced that it had designated Iran's Islamic Revolutionary Guard Corps as a "terrorist organization.
"

In May 2019, the United States formally imposed "zero oil export" sanctions on Iran (i.
e.
, escalated to "secondary sanctions" and the end of the 180-day transition period
).

In June 2019, the United States imposed sanctions on Iran's major petrochemical companies and dispatched aircraft carrier battle groups to the waters
around Iran.

In April 2021, after Biden took office as US president, the United States and Iran resumed negotiations on
the Iranian nuclear agreement.

.
.
.
.
.
.

In February 2022, the United States and Iran negotiated the eighth round of Vienna negotiations
.

2, this step: whether it can be achieved or not

This "Iranian nuclear agreement" is definitely not the other "Iranian nuclear agreement"

It should be known that the "Iranian nuclear agreement" reached during the Obama era in 2015 is a package of all-round sanctions lifting agreements on Iran, and its strength and the "concessions" of the United States are rare
in the world.
This is why after Trump came to power, he felt that the United States had encountered "injustice" and failed to prevent Iran's next ballistic missile development and other key sensitive areas, so he disregarded international morality and blatantly and unilaterally withdrew from the JCPOA
.

It is foreseeable that even if the new version of the "Iranian nuclear agreement" can be reached this time, it will certainly not be a simple restoration
of the JCPOA.

According to Reuters, the negotiations have now formed a basic text, a "shrinked" version, about 20 pages, roughly the content of the two-phase return to the nuclear agreement
.
The initial phase is Iran's cessation of 3.
67% enrichment of uranium, the U.
S.
allowing South Korea to thaw $7 billion in Iranian funds, Iran's release of detained Americans, and so on; After the initial phase is completed, Iran will restrict nuclear research and development in more aspects, and the United States will carry out a wider range of sanctions, which will re-allow Iranian oil exports
in the form of an exemption order issued by the US president.

However, the authenticity of this "shrinking" agreement was rejected by Iranian Foreign Ministry spokesman Khati Bzad, indicating that it is likely to be a unilateral draft of the United States and not approved by
Iran.
Hatibzad also stressed that as the Iranian nuclear negotiations enter the final stage, there may be more distorted information
.

To say that it is a shrinkage is to say that it is not as good as expected, or that it does not meet some of the standards
of the 2015 nuclear agreement period.
For example, a basic setting of the 2015 nuclear deal is to ensure that Iran accumulates the nuclear material needed for a nuclear bomb for more than one year, but this time, with the improvement of Iran's nuclear capabilities, it is estimated that it can only maintain the time for more than
half a year.

According to another news, Iran originally proposed to let the United States make guarantees, such as guaranteeing that it will not withdraw from the treaty, and ensuring that the lifting of sanctions is not a paper lifting but produces practical results in commercial and trade activities, which is difficult to operate
in practice.
Therefore, if an agreement can be reached, this agreement is more likely to be the basic version than the
high-end version.

In the coming days or weeks, the U.
S.
-Iran team will have to bargain over this text and contentious issues (such as the scope of sanctions lifting, the extent of restrictions on nuclear research and development, the length of the initial phase, etc.

).

There are indications that the United States wants to reach an agreement as soon as possible, and Iran may be willing to delay it a little longer to achieve a more favorable outcome
.
Moreover, since the start of the negotiations last April, it has become clear that Iran's negotiating advantage is expanding, and the outcome of the negotiations is evolving in a more favorable direction for Iran
.

Iran's diplomatic sophistication and control of the pace of negotiations are not at all like a medium-sized regional power, but a model for global powers
.

3, the next step: Iranian crude oil will be large-scale "kill" back to the international market

It may push international oil prices down significantly

Qingquan personally believes that the next step of the US-Iran negotiations is more likely, as long as Iran is not too "inch-inching"
.
For the United States, the Biden administration needs such a diplomatic victory to help it maintain as much advantage as possible in this year's midterm elections, while also continuing to strengthen the consistent strategy of the United States to "withdraw from the Middle East
.
"

In terms of the oil market, we know that Iran currently produces about 4 million b/d of oil (200 million tons per year, making it the fifth largest producer in the world), of which about 45% is for domestic consumption (1.
8 million b/d).

In the absence of sanctions, Iran's average daily crude oil exports are more than 2 million barrels, and the main exports are the European Union, China and India, with exports reaching 600,000 barrels per day
.
As the United States reinstated sanctions, the daily export volume of Iranian crude oil (including condensate) fell from nearly 2.
5 million barrels in 2017 to 400,000 barrels in 2020, a shrinkage of 84%.

Even so, Iran's economy did not collapse, and the blow of the new crown epidemic did not crush
Iran.
The resilience of the Iranian economy and the Persian nation is evident
.

In terms of natural gas exports, during the escalation of sanctions by the United States against Iran in the past two years, Iran's natural gas was mainly exported to two neighboring countries
, Iraq and Turkey.
For example, in 2020, Iran exported about 16 billion cubic meters (600 billion cubic feet) of natural gas, of which Iraq and Turkey accounted for 64% and 33%
respectively.
In recent years, Iraq has imported Iranian natural gas mainly for power generation to meet its growing power supply
.
With no other large export channels or LNG export terminals, even if sanctions are lifted, Iran's natural gas export pattern will not change significantly
.

(Iran's crude oil production and consumption evolution since 2011)

Evolution of Iranian crude oil and condensate exports since 2013

If the shrunken version of the "Iranian nuclear agreement" can be reached and the United States immediately lifts oil sanctions on Iran, then it is foreseeable that in 2023, Iran's foreign oil exports will return to the level
of 2017.
The new 2 million barrels per day is injected into the international market, which is not a small amount
.
This will quickly change the supply and demand of the international crude oil market from a tight balance of about 1.
5 million barrels per day to an easing mode of more than 3 million barrels per day, resulting in a significant decline
in oil prices.
Recently, Brent oil prices have begun to fall back to around $92 / barrel after rushing above $95 / barrel, and an important factor in the decline is traders' expectations that Iranian crude oil will soon enter the international market, although the worsening crisis in eastern Ukraine has continued to promote oil prices
.

It is expected that in 2023-2024, the Iranian oil and gas market will be redeveloped to the outside world, which will attract a large number of foreign investors to return or enter the Iranian market
.
But that's two years or so, unless Biden can be re-elected
.
Once Trump makes a comeback or other Republican candidates come to power, it is not ruled out that there will be another major shift in US policy toward
Iraq.