Prospects for Sanctions Relief Emerge Ahead of Iran Nuclear Deal Talks... International Oil Prices Plunge (Comprehensive)

"US Wants Agreement Before Iran's June Presidential Election"...Sanctions Relief Outlook Strengthens
WTI Plummets Over 4% on Expectations of Lifting Iran Oil Embargo

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] Ahead of the Iran nuclear deal (JCPOA) parties' talks, international oil prices plunged more than 4% amid speculation about the possible lifting of U.S. sanctions on Iran. This is analyzed to be due to expectations that oil supply will increase if the oil embargo on Iranian oil is lifted. However, the U.S. government immediately dismissed the possibility of lifting sanctions, and the Iranian government reiterated its existing stance that there will be no negotiations before the U.S. lifts sanctions, suggesting that restoring the Iran nuclear deal and lifting sanctions will take more time.

According to Bloomberg on the 5th (local time), Warren Patterson, Head of Commodity Strategy at ING Bank Singapore, said in a report that day, "There is a possibility that U.S. sanctions on Iran will be lifted and Iran's oil exports may increase," adding, "In the fourth quarter of this year, Iran's daily oil supply could reach 3 million barrels."

It is analyzed that the U.S. is likely to hasten negotiations to conclude before the Iranian presidential election in June by offering the card of lifting sanctions. According to Politico, the U.S. government is concerned about the high possibility of hardliners coming to power after the Iranian presidential election in June and is known to want to complete the nuclear deal negotiations before June as much as possible. The parties to the Iran nuclear deal, including the U.S., Iran, Germany, France, the United Kingdom, China, and Russia, will hold talks to restore the nuclear deal in Vienna, Austria, on the 6th.

After this report, international oil prices sharply dropped. On that day, West Texas Intermediate (WTI) crude oil prices on the New York Mercantile Exchange (NYMEX) closed at $58.65 per barrel, down $2.80 (4.6%) from the previous session. Brent crude oil prices on the London ICE Futures Exchange also traded at $61.78 per barrel during the session, down $3.08 (4.8%) from the previous close.

Meanwhile, the U.S. government drew a line, saying the Iran nuclear deal talks will not be easy. Ned Price, spokesperson for the U.S. State Department, said at a press briefing that day, "The Iran nuclear deal talks will be more difficult discussions than expected," and "We do not expect an immediate breakthrough." Iranian Foreign Minister Javad Zarif also continued the war of nerves earlier on the 2nd, stating, "There will be no meeting between Iran and the U.S. at this round of talks."

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