World market will get million barrels of oil if US and Iran resuscitate nuclear deal

  • August 10, 2022
World market will get million barrels of oil if US and Iran resuscitate nuclear deal

The global energy market will get a million barrels of oil if the US and Iran resuscitate the 2015 nuclear deal, but even if they do, it will not solve the global energy crisis, Helima Croft, head of commodities at RBC, said.

The US pulled out of the deal in 2018, under which Iran agreed to limit its nuclear activities in exchange for an exemption from international sanctions, Business Insider writes.

The exemption previously allowed Iran to sell its oil on the world market - which is why US and Iranian officials sought to revive it as the world faces an energy crisis caused by Russia's declining energy exports to the world market.

US and Iranian officials discussed the issue last week, and the European Union announced Monday that it had approved the final text of the agreement, which means Iran will have to agree to all the terms or reject the entire package.

If a deal is struck, it would be a major victory for Europe, which faces a potential natural gas emergency this winter. Croft said it would also reduce the pain after EU bans on Russian oil products take full effect Dec. 5, which would cut oil supplies from the market by another 2.2 million barrels.

Even so, taking Iranian supplies off the market will not be the quick fix that some are hoping for.

"The question with Iran is, do Iranians leaders want to take this deal?" Croft noted in an interview with CNBC, adding that US and Iranian leaders were close to reaching an agreement in March of this year before Iran refused.

The deal would also need congressional and Iranian approval, meaning it is far from having any impact on Europe's energy crisis.

"It's not a light switch. It's a potentially multi-month process," Croft said. "But again, with those Russian barrels in the balance come December, additional supplies from Iran would be helpful."

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