Rashid Husain SyedCrude oil markets are focused on the Iran nuclear deal.

A new United States administration under President Joe Biden has pledged to revert to the Joint Comprehensive Plan of Action (JCPOA), commonly known as the Iran nuclear deal.

The world awaits the next moves, which will set the contours of future Iranian oil output.

With negotiations expected, both sides are taking positions.

Before the Biden administration was sworn in on Jan. 20, Iran’s parliament set a deadline of Feb. 21 for the U.S. to lift sanctions as part of a move back into the nuclear deal.

Tony Blinken is regarded as one of the architects of the nuclear deal. In his first press briefing as the new secretary of state, he underlined that the United States was ready to rejoin the Iranian nuclear deal and start negotiations, but only if Iran joins and complies with its provisions.

Iran has also begun making its position known. It may co-operate with the United States on oil and security in the Persian Gulf, said Foreign Minister Mohammad Javad Zarif in remarks published last week.

So the ping-pong game has begun.

When the U.S. opted to withdraw from the nuclear deal during the administration of Donald Trump, crude oil exports from Iran were subjected to harsh American sanctions. Iranian crude exports dropped to just a fraction of previous levels.

But with Trump gone, firms monitoring Iran’s output are reporting higher crude exports.

Geneva-based Petro-Logistics said Iranian crude exports were set to exceed 600,000 barrels per day (bpd) this month for the first time since April 2019, after rising by 100,000 bpd in the fourth quarter of 2020. While still a fraction of the pre-sanctions rate of about 2.7 million bpd registered in May 2018, the level of January exports represents a sizable boost.

Flows are up 45 per cent since October, estimates Washington-based energy consulting firm SVB. It says Iranian crude exports increased to 710,000 bpd in December from 490,000 bpd in October, and that shipments and production so far in January were moving up.

“Iran has already started increasing its production and exports in anticipation of negotiations with the U.S.,” said Sara Vakhshouri of SVB.

Financial analysis provider Refinitiv Eikon, however, tracked just 370,000 bpd of Iranian crude exports in December.

But Iranian leaders have been insisting that their crude exports were considerably higher than reported. Oil Minister Bijan Zanganeh last week said the country’s exports had recently risen “significantly,” without providing details. Elias Naderan, an Iranian lawmaker and economist, was quoted by the Mehr News Agency as saying Iranian crude output has reached 900,000 bpd.

With the start of offshore pipe-laying, Iran’s geopolitically game-changing Goreh-Jask pipeline project also saw a major advance last week, according to Simon Watkins in Oilprice.com. The project reportedly will be ready by March. That would help Iran bypass the Strait of Hormuz, while allowing it to strategically block the crude shipments of others via the straits without impacting its exports significantly.

Additionally, according to Watkins, Iran has huge oil storage capacity at Mobarak Mount, courtesy of the new pipeline in the western Jask region along the Sea of Oman. From there it’s just a short sea journey to Pakistan and then to China.

This may also result in final approval of construction of a Iran-Pakistan oil and gas pipeline.

All of this could put further pressure on the developing India-United Arab Emirates-U.S. relationship, since India may think that resuscitating the Iran-Pakistan-India pipeline is preferable to the current plans with the U.A.E.

The cat and the mouse game is on!

Toronto-based Rashid Husain Syed is a respected energy and political analyst. The Middle East is his area of focus. As well as writing for major local and global newspapers, Rashid is also a regular speaker at major international conferences. He has been asked to provide his perspective on global energy issues by both the Department of Energy in Washington and the International Energy Agency in Paris.

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