In this news, we discuss the Analysis: Biden presidency could cut slow path to resumed Iran, Venezuela oil exports.
WASHINGTON / MEXICO CITY / LONDON (Reuters) – The return to diplomacy promised by Joe Biden, Democratic presidential candidate, with OPEC members Iran and Venezuela, could pave the way for their exports to return of oil if he wins, but not before at least several months of checks, discussions and negotiations.
The timing of a potential resumption of shipments is crucial for global oil markets: US President Donald Trump’s unilateral sanctions against the two countries since taking office in 2017 have blocked up to 3 million barrels per day (b / j), or 3% of world supply. Iran was the hardest hit, with exports declining from around 2 million b / d to around 500,000 b / d.
The sanctions fit perfectly with Trump’s energy dominance policy aimed at boosting oil exports from the United States, which in 2018 became the world’s largest producer of crude.
A broad shift in Iranian policy would likely come first, but the earliest possible for that country’s full and sustainable oil exports to return is around a year, said Richard Nephew, the country’s leading sanctions expert. ‘US team that helped strike a deal with. five other world powers on Tehran’s nuclear program in 2015.
Trump withdrew the United States from this deal in 2018 over objections from their European and Asian counterparts. He argued that the deal did not address Iran’s ballistic missile program and militancy across the Middle East.
Biden, who was vice president to President Barack Obama when the 2015 deal was struck, said he wanted to offer Tehran a return to diplomacy. If Iran pledges not to acquire nuclear weapons, it will join and strengthen the agreement.
Nephew, now a researcher at Columbia University’s Center on Global Energy Policy, said a Biden administration is unlikely to start working on Iran for several months after the Jan.20 inauguration. He would first be busy with the groundwork of finalizing leadership teams and prioritizing policies, he said.
A deal would likely only happen after Iran downgrades its supplies of enriched uranium, which accumulated under the Trump administration. Reducing the mixture takes time and verification by UN inspectors could take at least several months. It would take more time to hold multilateral negotiations on a new deal with Iran and to complete it.
“It’s going to wait,” Neveu said.
Bob McNally, an energy expert with the National Security Council under former President George W. Bush and chairman of the Rapidan Energy Group, has predicted a return to Iran’s oil exports in the second half of next year.
EU officials are eager to renew relations with Iran if Biden wins, but have not attempted to engage in his campaign on the issue ahead of the election, fearing a pushback from the Trump administration if Trump wins , said three European diplomats.
The Biden campaign did not comment on Iran on this story, but pointed to a Biden article here on CNN.com in September that said he would make an “unshakeable pledge” to prevent Iran from acquiring a nuclear bomb.
Iran does not anticipate rapid relief from the sanctions that have hit its economy, said the head of an oil trading company in Tehran. A presidential election slated for Iran on June 18 would almost certainly delay negotiations on the issue.
“It will take a long time,” the source said.
Once the policy is resolved, large shipments could return quickly. Iran has accumulated around 100 million barrels of oil in floating storage and offshore reservoirs in countries like China, according to Iman Nasseri, managing director for the Middle East at consultancy firm FGE.
“Iranian oil can reach the markets overnight,” he said. “Iran can count on this export for months to come, while also striving to bring production back to previous levels.”
In the meantime, a Biden administration could be more lax in applying sanctions and grant a new round of waivers, allowing a few countries to purchase limited amounts of Iranian oil, said Ed Crooks, vice president of the Americas at Wood. Mackenzie. Trump cut the waiver program in 2019.
MURKIER WAY ON MADURO
Biden shares Trump’s desire to see the replacement of Venezuelan President Nicolas Maduro, a socialist whose 2018 election was widely seen as fraudulent.
Biden would likely retain sanctions against Venezuelan state-owned oil company PDVSA in the short term, according to Leopoldo Martinez, strategist for Biden’s campaign on the Latin vote.
But the strategy would likely change dramatically under Biden, with more input from allies and trading partners on the way forward.
“We are not looking to dismantle the sanctions policy, but to apply sanctions in an intelligent way, aided by a multilateral effort and with specific objectives to be achieved, mainly free, fair and credible elections,” Martinez said.
The sanctions could theoretically be lifted once these objectives have been achieved.
Meanwhile, a Biden administration would also push for humanitarian aid in Venezuela, where much of the population has suffered sanctions on oil, the cornerstone of its economy, Martinez said.
Rapidan, McNally’s group, said in a note that humanitarian aid could include a relaxation of US sanctions on Venezuelan imports of fuels like gasoline, but not a halt to sanctions on oil exports.
Even in the event of a change in management leading to the lifting of sanctions, a rapid return of Venezuela’s exports to above around 1 million b / d, up from around 500,000 b / d currently, is unlikely for six months at a time. an, Rapidan said.
Lack of investment has left equipment and fields in Venezuela, which holds the world’s largest oil reserves, in a state of disrepair.
“This one is a much more distant scenario than Iran,” Columbia’s nephew said of Venezuela. “I’m not sure we have the same punching capacity there.”
Reporting by Timothy Gardner in Washington, Marianna Parraga in Mexico City, Bozorgmehr Sharafedin in London; additional reporting by Robin Emmott in Brussels; Editing by Richard Valdmanis and Marguerita Choy
Original © Thomson Reuters