OPEC+ Prepares To Bring Iran Back Into Oil Supply Deal After Sanctions

Reuters cited an Indian refining source on Thursday that the Indian company is in talks with Iran for sourcing its oil, but the sources declined to be identified due to sensitivity of the matter.

India, which used to be Iran's No. 2 customer, halted oil imports in 2019 after former US President Donald Trump withdrew from the nuclear deal and re-imposed sanctions on Tehran's oil exports.

According to the unnamed source, New Delhi is waiting for more clarity on the nuclear deal, which apparently is close to tangible results.

A new deal can potentially pave the way for more oil supplies on global markets and soften prices about $5-10 a barrel, because Iran can contribute five percent to the world’s crude volume.

Earlier on Thursday, Japanese oil and energy corporation ENEOS announced its readiness to resume oil imports within two to three months of any revival of the 2015 Iran nuclear deal.

Tsutomu Sugimori, chairman of Japan’s largest refiner, said Thursday that ENEOS would not be able to resume Iranian imports immediately as it needed to set up insurance and arrange shipping. He called a two to three-month period a “possibility.”

Also, in preparation for the possible easing of US sanctions, Iran and South Korea, another major Iranian oil customer before 2018-19, opened detailed talks on freeing Tehran's money frozen by Korean banks fearful of punitive US measures.

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Amir-Abdollahian is set to join many world leaders who have converged for the three-day event annual security gathering, known as "Davos for defense", which kicks off on Friday at the luxurious Bayerischer Hof hotel in Munich.

The weekend conference will be dominated by the Ukraine crisis, but the event serves as a platform for other global issues.

Roundtables on Saturday, the main day of events, will also address the fate of the Vienna talks to revive Iran’s nuclear deal with world powers and the fragile security situation in the Sahel.

Both issues have flared up this week with reports about the finalization of a new US-Iranian deal and the French withdrawal of troops from Mali after almost a decade fighting Islamist insurgents.

Over the weekend there will also be high-profile panels on cryptocurrency, climate change and the pandemic.

The chairman of the conference, Wolfgang Ischinger, has told reporters that he could not recall a time when there were "so many overlapping crises".

This is the first no-show by a Russian delegation in years, highlighting how much East-West relations have deteriorated.

The official agenda of the Iranian foreign minister is not announced but much of the action is likely to take place on the sidelines of the main stage.

The parliament’s move earlier this week has been described as the most serious confrontation so far between the parliament and President Ebrahim Raisi.

According to the news agency of the Iranian parliament, ICANA, Hamid-Reza Hajibabaei, the chairman of the budget committee of the Majles has said that the parliament has stood by the nation by not letting the government to stop providing cheap dollars to importers for essential commodities such as wheat, sugar and meat.

In January, parliament had already indicated its opposition to scrapping the subsidy.

Iran has spent between 8-14 billion dollars a year since 2018 to offer importers the cheap dollars. This has been a tremendous burden on its finances since US sanctions stopped most of its oil export earnings in dollars. The Raisi government wants to end the practice to balance its budget, but lawmakers say this will boost the already high rate of inflation and could cause unrest in the country.

A nuclear agreement with the United States and an end to oil sanctions can boost revenues and enable the government to keep the indirect subsidy.

In its leading frontpage report, reformist daily Sharq wrote that Planning and Budget Organization Chief Massoud Mirkazemi who went to parliament on Monday to justify the elimination of the preferential rate of exchange came out of the Majles at the close of business tired and frustrated.

One of the lawmakers who supported the elimination of the preferential rate in the next year's budget, was Alireza Abbasi, the chairman of the Agricultural Committee of the Majles who believed that doing so, will be in the interest of producers of agricultural goods in Iran. He said there are so many loopholes in regulations and traders use them to benefit from the preferential rates while some 80 percent of agricultural producers can never use the advantage.

According to Sharq, Ali Rezaei, the spokesman for the budget committee explained that the reason for the committee's opposition is that it could lead to social and security problems, meaning that doing away with the preferential rate will lead to an increase in prices that could bring about widespread protests.

He said the Majles has asked the government how it can guarantee that the elimination of the subsidy will not lead to social problems and make life difficult for the people, and the government answered: "Inshallah, God Willing, there will be no problem!" Rezaei added that Majles remains concerned about the problem and its impact on low-income people.

Budget Committee Chairman Hajbabaei on Wednesday described the decision as a determining one. "This is the country's most important problem, and many Iranians are concerned about it." He added that "the committee has approved allocating$9 billion dollars in the budget for next year. MirKazemi has said earlier that in the current year there was $8 billion dollars in the budget for purchasing essential commodities, but that amount finished well before the end of the year.

Meanwhile, figures released in September showed prices for essential commodities rose 150 percent, which means doing away with the preferential dollar rate could lead to more price increases.

Sharq has described the difference between the parliament and the government as the first dispute between President Raisi and Majles Speaker Mohammad Bagher Ghalibaf and similar to past instances, Supreme Leader Ali Khamenei will have to intervene to end the dispute. There is still time before the final vote at the Majles on the budget. In the meantime, by leaning to either side, Khamenei will reveal his favorite politician between Raisi and Ghalibaf.

Tsutomu Sugimori, chairman of Japan’s largest refiner, said Thursday that ENEOS would not be able to resume Iranian imports immediately as it needed to set up insurance and arrange shipping. He called a two to three-month period a “possibility.”

Japan suspended Iran oil imports in 2019, as the expiry of a limited United States sanctions waiver raised the threat of US punitive action against Japan for buying Iranian oil. Sugimori Thursday reflected his company’s interest in Iranian oil, which is suitable for refining and likely to be competitive as global prices rise.

"Once reaching agreement, [Iranian oil] will be a choice for our crude oil procurements, and that's when we start our consideration,” he said. "Without the lifting [of the US threat to penalise the company], there will be no deal [to resume imports] because the current sanctions are weighed heavily…”

Sugimori suggested that the easing of US ‘maximum pressure sanctions’ would bring an extra 2 million barrels of oil a day onto the world market.

Also in preparation for the possible easing of US sanctions, Iran and South Korea, another major Iranian oil customer before 2018-19, opened detailed talks on freeing Tehran's money frozen by Korean banks fearful of punitive US measures.

Mohsen Mousavi Khansari, board member of NGO aimed at raising awareness of Iran’s water and soil issues, made the projection in an interview with Tasnim news agency Wednesday.

Khansari said that the five dams around Tehran, the main sources of drinking water for the metropolitan region, currently have 300 million cubic meters (m3) of water, which is not enough to avert a water shortage in the summer.

Latyan and Lar dams, which supply water to the eastern parts of Tehran province, have a total 20 million m3 of water that will run out in coming days, he said. Water in Amirkabir Dam, in the west of Tehran, is down two thirds from a year ago to 30 million m3, “which is deeply worrying,” Khansari told Tasnim.

“If we add Mamlu and Taleqan Dams to the other dams, there will be a total of 300 million cubic meters of water, and if we consider the rate of evaporation and decrease in precipitation, we will definitely have many problems in the summer to supply drinking water to Tehran,” Khansari concluded.