What Are Iran Nuclear Deal Talks That May Impact Oil Prices Amid Russia-Ukraine War? | Explained
Iran Nuclear Deal: The US administration has been trying to revive the 2015 JCPOA. If the deal, that was dumped by Donal Trump, is revived, it may help ease the soaring oil prices amid the Russia-Ukraine war.
Iran Nuclear Deal: Under the JCPOA, all the sanctions on Iran were removed in exchange for Iran's agreement to dismantle its nuclear program (AFP Photo / HO / Iranian Presidency)
New Delhi: The global crude oil prices have been rising exponentially since the Russian invasion of Ukraine was announced in February. Within a matter of a couple of months, the oil prices have almost doubled from $75 to $140 per barrel. On Monday, the Brent crude oil touched $139.13 briefly as reports emerged of the US and its allies planning to stop importing oil from Russia.
In all this, according to media reports, the US is working to revive the 2015 Iran Nuclear Deal or the Joint Comprehensive Plan of Action (JCPOA). The deal was dumped by former US President Donald Trump. Under the deal, sanctions worth billions of dollars on Iran were waived in exchange for Iran's agreement to dismantle its nuclear program.
According to Reuters, the latest talks around the deal have been slow due to new demands by Russia and China. China, Russia, France, the United Kingdom and Germany were also a part of the JCPOA. However, US Secretary of State Antony Blinken has dismissed such claims.
Why Was JCPOA Dumped By The US?
According to Bloomberg, the sanctions were imposed by the Trump administration on Iran because of the fears expressed by its allies in the middle-east including Israel, Saudi Arabia and the UAE. After the deal was dumped, Iran too, refused to reduce its stockpile of enriched uranium.
The Central Bank of Iran was also imposed with 'terrorism sanctions' after an attack on Saudi Arabia was linked to Tehran. Thus, Iran continued to remain under hard sanctions.
How Will Revival Of JCPOA Ease Oil Prices?
After the dumping of the deal, various countries importing Iranian oil, including India, Japan and China, were also threatened with sanctions if they continued to import oil from the country. Iran went from being a top oil supplier to India to supplying no oil to the country in 2020.
If the deal is revived, according to Bloomberg, Iran will be able to release 'tens of millions' of barrels of oil into the global market. This might ease the soaring oil prices. However, the report also said that it might take around 2 months for the country to resume the oil trade.
For the unversed, at its full capacity, Iran was exporting around 3.7 million barrels of oil per day. It was OPEC's second-highest exporter. The sanctions reportedly impacted the Iranian economy badly. If Iran returned to its old supply, the global oil supply would increase substantially, making it easier to cater to the growing demand. This becomes especially essential now as the Russian Ukraine war has restricted the oil supply.
How Will JCPOA Help Iranian Banking System?
According to Bloomberg, if the sanctions are lifted, Iran will be added to the SWIFT messaging system. It would make the purchase of humanitarian goods easier for the country. Also, it would make it easier for the country to trade goods not covered under the deal.
It would also remove the sanctions on the Central Bank of Iran. The sanctions on Iran have reportedly caused the country harm of millions of dollars annually. The lifting of restrictions is expected to help Iran get out of the economic slump.
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