Iran, which under Trump suffered from the embargo on its crude exports, sees the end of the tunnel with the arrival of Joe Biden. The Democratic leader is in favor of lifting sanctions against Tehran, provided the strict implementation of the 2015 nuclear deal.
The Islamic Republic of Iran expects the next US administration to ease some sanctions imposed by Trump’s executive, including the embargo on its oil exports. This will allow it to strengthen its presence in the oil market and will leave room for the implementation of the nuclear agreement concluded in 2015 with the United States and the European powers.
“Tehran will take measures to prepare the resources and equipment of the petroleum industry for the production and export of petroleum according to current capacities in the next three months”, we read on the official website of the president Hassan Rouhani.
Iran is indeed relying on the promise made by US President-elect Joe Biden to return to the deal, which was negotiated when he was vice president under Barack Obama. According to the agreement, Iran must limit its nuclear program and allow tightening of controls by the international community for at least a decade, which will help lift the sanctions that have been raining down on the country for several years.
But after coming to power, Donald Trump criticized the deal, which he called “the worst deal ever signed by the United States.” He further argued that Iran is not honoring its commitments and continues to want to acquire nuclear weapons, which has not been proven. Subsequently, in 2018, he withdrew the United States from this agreement, reinstating and tightening the sanctions against Tehran, in particular on its exports of crude.
It should be noted that after the 2015 agreement, Iranian oil exports reached 2 million barrels per day. But since the implementation of US sanctions, exports have fallen dramatically to just 133,000 barrels per day in November. According to JPMorgan Chase & Co., Iran could increase its crude exports by 1.2 million barrels a day next year if it signs a new deal with Washington. This could be detrimental to OPEC +, which is currently working to adapt its supply to demand, in order to keep prices within a range that suits producers.
One thing is certain, OPEC + will not be able to force Tehran to reduce its supply, because the cartel has exempted it from production cuts due to sanctions and its economic difficulties.
Source Ecofin Agency