Different players' take might be shifting.
A surreal footnote to a most surreal week in world affairs.
While hell broke loose in Ukraine , Western and Russian diplomats -- not to mention hard-line emissaries from Tehran -- sat calmly together in Vienna , dotting i's on a prospective reborn Iran nuclear agreement.
"Chances are better than even that the deal will be revived," says Eric Brewer , a senior director at the Nuclear Threat Initiative. "We should know by the middle of this week."
That could bring some respite for oil consumers who have watched crude prices climb more than 20% this year, with sanctions on Russia threatening to push them further. Iran can likely increase production by more than 1 million barrels a day this year if it exits the nuclear sanctions penalty box. That would raise global production by about 1.5%.
Maybe 200,000 more barrels a day could be eked out of another U.S. - sanctioned oil power: Venezuela . President Joe Biden and his administration have quietly eased the so-called maximum pressure campaign that Donald Trump imposed on Nicolas Maduro's regime, allowing more crude to leak out to China and other nondollar buyers. " Venezuela has found ways to adapt to sanctions, and the U.S. has spent less energy enforcing them," says Francisco Rodriguez , a fellow at the Council for Foreign Relations .
When he took office, Biden pledged to revive the multilateral Iran nuclear accord hammered out by Barack Obama and abrogated by Trump. Supporters say the Joint Comprehensive Plan of Action (JCPOA), the formal name for the Iran deal, remains the best mechanism for keeping the Islamic Republic away from a nuclear bomb. "It's impossible to 'solve' the Iran nuclear issue," Brewer says. "JCPOA puts as much time and space as possible between Iran and nuclear weapons."
Biden's plans hit a snag last June when Iranian elections brought Ebrahim Raisi to power as president. He is a purported strict conservative with close ties to the country's religious leaders. Tehran walked away from talks until November. The prospect of selling more oil at eight-year highs nudged them back to the table, however.
The U.S. has its own cause for urgency. Iran is thought to be within a few weeks of having enough enriched uranium for a nuke. A deliverable weapon, mounted on a missile, would take longer, Brewer says. Tehran's progress is focusing minds, nevertheless.
The last sticking point in talks appears to be Iran's push for guarantees that the next U.S. president won't repeat Trump's actions and tear up whatever Biden signs now. The U.S. can't give that assurance: A formal treaty would require two-thirds approval by the Senate , a goal clearly out of reach as far as Iran is concerned.
Chief Iranian negotiator Ali Bagheri flew back to Tehran last week for consultations, leaving his U.S. , European Union , U.K. , Russian, and Chinese counterparts hanging in Vienna . Observers predict Iran will settle for keeping more centrifuges than last time so that their nuclear efforts are easier to pull out of mothballs. "What we hear from well- informed people in Tehran is that we really are close to a deal," says Scott Modell , managing director of Rapidan Energy Group .
An accord could take effect within a month and boost Iran's crude output to 3.6 to 3.8 million barrels a day by late 2022, from about 2,500 now, Modell says. That's not enough to reverse oil's bull run, but it "could be temporarily macro bearish," he predicts.
Venezuela's oil output has suffered no less than Iran's from U.S. sanctions. It dropped from more than 2 million barrels a day when Trump took office in 2017 to about 500,000 in 2020.
A grand political bargain looks still tougher with Caracas than with Tehran . The concession Washington demands from Maduro is existential: new elections that could unseat him. Biden is constrained on his side by a growing Venezuelan émigré voting bloc -- and Cubans who share their anti-socialist grievances -- in the politically key state of Florida . "Being tough on Maduro has paid off electorally," Rodriguez says.
Bumper prices and laxer enforcement has still bumped Venezuelan output to some 750,000 barrels a day starting last summer. The country could squeeze a bit more before needing large investment in depleted fields and infrastructure. " There's still some low-hanging fruit there," Rapidan's Modell says.
Extra volumes from Iran and Venezuela won't offset major disruptions in Russia , which exports more than 3 million barrels of oil a day. But an extra 1 or 1.5 million barrels isn't small change for a market that famously swings on the margins.
Stay tuned.
Write to editors@barrons.com
(END) Dow Jones Newswires
02-27-22 1705ET
Copyright (c) 2022 Dow Jones & Company, Inc.
Kleptocrats: a ruler who uses political power to steal his or her country's resources.
Kleptocracy: government by those who seek chiefly status and personal gain at the expense of the governed.
