Experts do not expect advances in Vienna’s nuclear talks

The United States and Iran are stepping up efforts to resolve a nuclear stalemate that puts global oil markets on edge and experts skeptical of success.

“It’s a crisis time for these negotiations,” Helima Croft, global head of commodity strategy at RBC Capital Markets, told CNBC’s Hadley Gamble on Tuesday, as representatives met in Vienna, Austria, for “indirect talks” aimed at to bring the two countries back into compliance with the 2015 Nuclear Agreement.

“We will enter the election season in Iran in a few weeks and, if we do not make a significant step forward in these negotiations, everything will probably freeze,” she said.

Although the negotiations are the most significant step so far in efforts to revive the agreement, neither side expects a major breakthrough. Iranian officials want the U.S. to end Trump-era economic sanctions before returning to compliance – a concession that Washington does not seem to want to accept.

“I don’t think we can expect much,” Albert Wolf, an associate member of the Johns Hopkins School of Advanced International Studies, told CNBC on Tuesday.

Skepticism about the negotiations was compounded by reports that European officials would act as intermediaries between the US and Iran, rather than the two sides meeting face to face to discuss the issues.

“There was no formal or informal conversation between the United States and the Iranian side, so it looks like these negotiations are going to be a failure at the moment,” Wolf said.

Others, including former United States Energy Secretary Ernest Moniz, they said that time is running out for the US to engage in meaningful diplomacy. The Iranian elections in June are expected to bring more radical political leadership, after years of economic suffering caused by the Trump administration’s sanctions following Washington’s withdrawal from the agreement in May 2018.

The American authorities themselves seem to be equally sober about the negotiations.

“We do not underestimate the scale of the challenges that lie ahead. We are in the early days,” State Department spokesman Ned Price said during a press conference on Monday.

“We do not foresee an early or immediate advance, as these discussions that we hope will be difficult. But we believe that these discussions with our partners and, in turn, our partners with Iran are a healthy step forward.”

Price added: “We do not foresee at the moment that there will be direct negotiations with Iran, although, of course, we will remain open to them. And then we will have to see how things start earlier this week.”

One of OPEC’s largest oil producers, Iran’s exports were reduced in the years following the U.S. withdrawal from the Joint Global Action Plan. A return to business and lifting U.S. sanctions on Iranian oil could significantly impact the dynamics of the oil market.

Croft said that “a significant move” in the negotiations would increase the prospect of large quantities of Iranian oil returning to the global market.

“If they get a head start in the coming weeks, I think we can expect significant quantities to hit the market in the second half of the year,” she said.

However, she added that if Washington or Tehran make a commitment and there is no progress, the chances of resuming the deal and fully restoring Iranian exports this year will be greatly reduced.

Not all market watchers see the negotiations with Iran as consequences for the price of oil in the near future, however. Goldman Sachs analysts led by Damien Courvalin do not see a full recovery in Iranian oil exports this year.

“After an increase in Iran’s exports so far this year, our basic case remains that a full recovery will not occur until the summer of 2022, implying a deal likely in early 2022,” Goldman analysts wrote in a note on Tuesday. -market.

“Even if an agreement is reached earlier, we believe that it would not hinder our constructive view of oil in relation to future markets until 2022, given OPEC’s likely compensatory response and the expectation of consensus for Iran’s return next year.”

Iranian oil production has increased sharply in recent months, reaching 2.14 million barrels per day in February, according to S&P Global Platts – “an increase of 190,000 b / d from a 33-year low of 1, 95 million b / d in August, “the company reported.

The boost comes as Tehran increases its oil shipments to China by challenging Washington, a venture possible with the help of anti-detection methods, such as turning off its ships’ transponders or AIS – Automatic Identification System – a technique that has led its ships to be known as “ghost ships”.

Although American officials have condemned this practice, Croft warned that Washington’s economic influence may have waned thanks to stronger oil prices and increased Iranian exports to China.

“It does not seem that Iran is very afraid of being stopped by the United States government,” said Croft.

– Amanda Macias from CNBC contributed to this report.