Economy

IAEA Confirms Iran Fulfills Nuke-Related Commitments Despite US Exit From Deal

IAEA Confirms Iran Fulfills Nuke-Related Commitments Despite US Exit From Deal

Oil prices clocked up more multi-year highs yesterday as traders adjusted to the prospects of renewed United States sanctions against major crude exporter Iran amid a tightening market.

Under the terms of the Iran nuclear deal signed by the Obama administration in 2015, Iran had agreed to limit its sensitive nuclear activities, and in turn was allowed, among other things, to sell oil in the worldwide market.

The nuclear deal was negotiated by then-president Barack Obama with Britain, China, France, Germany and Russian Federation to limit Iran's nuclear activities in return for relief from crippling worldwide sanctions coordinated by the Obama administration.

Payment to Iran may become hard if European Union also pulls out. Le Maire asked. "Or do we want to say we have our economic interests, we consider we will continue to do trade with Iran?" For oil and other petroleum products there will be a 180-day period in which people doing business with Iran will be able to wind down those operations before facing penalties.

U.S. bank Goldman Sachs said renewed sanctions and risks to supplies elsewhere, especially in Venezuela, meant there was a strong possibility of higher prices than the bank's summer Brent forecast of $82.50 a barrel.

"Israel, the country Iran once stated must be 'wiped off the map, ' might immediately launch a preemptive strike against Tehran", the editorial predicted, in a tense that suggests it was written before Trump announced his decision.

But German Chancellor Angela Merkel says the US withdrawal from the Iran accord isn't a reason to dump decades of trans-Atlantic ties altogether.

Tourism in Iran had also benefited from the nuclear deal, with visitor numbers increasing from 3.8 million visitors in 2012 to over 5 million in 2015, and this could also be affected by renewed sanctions. According to the U.S., the deal was ill-negotiated, had many loopholes, and inspection provisions lacked adequate mechanisms to prevent, detect, and punish non-compliance.

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France's foreign minister on Thursday condemned the United States for reimposing sanctions against foreign companies trading with Iran, labelling the move "unacceptable" in comments that expose the deepening rift between Washington and its European allies on the issue.

In a research note, Gregory Daco of analyst firm Oxford Economics pointed out that Iran's oil production has grown around 1 million barrels per day to 3.8 million barrels per day since USA sanctions were lifted past year. For the past five months, OPEC members have been enforcing production cuts that they plan to continue into the end of the year.

This all comes at a time when the global oil supply is slimming down.

He added that there was a "perfect storm for higher prices" owing to crude-rich Venezuela's economic woes, which have been made worse by fresh USA sanctions. With shifting agendas and political equations, there has been increasing division within OPEC lately.

Iranians gathered to protest against the US and President Trump after his withdrawal from a 2015 nuclear deal. However, Saudi Arabia and Russian Federation are already eyeing this opportunity and capture a share of this pie, which would normalize the supplies eventually.

The top diplomats of Iran, France, Britain and Germany are expected to meet early next week to discuss their next steps. Its production accounts for about 4.0 percent of the world's oil supplies. India imports almost 80 percent of its crude requirement from worldwide markets.

If Iran threatens to resume nuclear testing and the USA expresses concern, then any type of confrontation will raise oil prices even further, Bailey said. Even for the producers, a steep rise is not desirable as they might then have to bear a share of the subsidy burden.