This morning, oil markets saw prices sharply lower as headlines suggested that the Iran nuclear deal may be close to completion. The EU has been attempting to broker a deal between the US and Iran to allow inspections to resume for Iran’s nuclear facilities and to allow Iranian oil to flow to global markets. The US withdrew from the agreement in 2018, prompting Iran to restart its pursuit of nuclear weapons. Now, with Iran saying a deal could be reached “in the next few days,” markets are watching to see what comes next. Fuel prices have paired some of their losses, but crude oil remains below $90/bbl, and gasoline is showing hefty 10-cent losses.
At stake is roughly 0.8-1.0 million barrels per day of production. Europe hopes to bring more nearby supplies online before its embargo on Russia takes place at the end of the year. Iranian oil could help alleviate the pain from Russian sanctions, but analysts don’t have high hopes the nuclear deal will come soon. The US and Iran have been close to a deal many times before, though the prospect of less Russian oil and skyrocketing inflation may force western negotiators to push harder for a solution.
Iran has committed to providing feedback to the EU’s proposed deal by the end of today. Of course, their stance is predicated on whether “the US shows a realistic approach and flexibility,” according to Iran’s foreign minister. Depending on the feedback, today could be the beginning of the end for Iranian sanctions. Alternatively, if Iran tries to secure additional concessions, negotiations would continue with no clear end in sight. The US has committed to providing its feedback to Europe privately.