US suspends Iran oil sanctions while Tehran exceeds crude export quota


The White House has announced that while negotiations are underway the US is suspending oil sanctions against Iran due to the fact that the Islamic republic is cooperating with the international community to dispel fears regarding its controversial nuclear effort.

“The United States has committed to pause efforts to further reduce Iran’s crude oil sales for a six-month period under the Joint Plan of Action between the P5+1 and Iran,” White House Press Secretary Jay Carney stated.

US suspends Iran oil sanctions while Tehran exceeds crude export quota

As a result of these steps Iran has agreed to “halt – and in key respects roll back – progress on its nuclear program.” In this matter US relies on the UN atomic watchdog assessment of the situation. Carney mentioned that International Atomic Energy Agency confirmed that Iran was complying with the agreements reached by the Islamic republic and the world powers in November 2013.

Two facts need to be mentioned in this respect. Firstly, the current market situation is generally favorable and allows US to put more pressure on countries not to buy Iranian oil. Carney emphasized that in the White House statement: “There currently appears to be sufficient supply of non-Iranian oil to permit foreign countries to reduce significantly their purchases of Iranian oil.”

“Market conditions suggest that there is sufficient supply to permit additional reduction in purchases.”

Secondly, according to the Joint Plan of Action, Iran is obligated to cap its average daily oil exports to six key oil-importing nations, that include Taiwan, Turkey, South Korea, Japan, India and China, at about a million barrels. So far Tehran has exceeded its quota – on average the country has been exporting 1.3 million barrels per day since December. Moreover, in February Iran’s oil exports have reached a 20-month high with an average of 1.65 million barrels sold daily.

However, David Cohen, the US Treasury’s undersecretary for terrorism and financial intelligence, cautions against rushing to judgment since the deadline to reach a comprehensive agreement will expire in almost two months, on July 20. “I think it’s important not to look at month-to-month fluctuations,” he told CNBC. “We are in the beginning of June. We still have more time on the clock here with the Joint Plan of Action, and we’ll watch to see how things develop,” he added.

The US State Department expressed the same hope earlier. “We expect, we still expect, and anticipate that this will average over a six-month period … to meeting the bar that was set,” State Department spokeswoman Jen Psaki said on April 11.

Meanwhile on Tuesday, Iran’s President Hassan Rouhani reiterated that Iran could become a nuclear power if it wanted to. “Without a doubt, nuclear power is our definite right,” he said during a ceremony in Tehran marking the 25th anniversary of the death of Ayatollah Ruhollah Khomenei, the founder of the Islamic Republic.

He also stressed that the Islamic republic will “defend interests of Iranian nation” and strive to put an end to international sanctions that devastated the country’s economy. Iran was once the third largest exporter of crude oil. Before the tough sanctions were introduced in early 2012 it was exporting over 2.5 million barrels-per-day. If current limit is increased Iran could return to those figures.

If official estimates are to be trusted the country could produce over 4 million barrels of crude oil per day. Iran’s Vice-President and government spokesman Mohammad Baqer Nobakht said as much yesterday, on June 4. “We have the capacity to produce more than 4 mb/d, but we are running the country by exporting 1mb/d in a bid to take maximum benefit from the country’s resources,” Nobakht said, according to the FARS news agency. He also mentioned that Iran has foiled sanctions imposed by the US and its western allies in recent years.

The next high-level talks aimed at finalizing a historic deal will be held later this month. Although the latest round of negotiations in mid-May ended without tangible progress, Reza Najafi, Iran’s ambassador to the IAEA is confident that Tehran and P5+1 will reach the agreement before the deadline expires. “We believe that we can meet the deadline set out in the Geneva agreement and we work toward that aim,” Najafi said Wednesday in Vienna where the experts from both sides are meeting in preparation for the next round of talks.

“We continue to negotiate in good faith with our counterparts… (to reach) a long-term comprehensive solution that would be advantageous to both sides,” he told journalists.

Some doubt that agreement will indeed be reached by July 20. However, Olli Heinonen, former Deputy Director-General for Safeguards at the International Atomic Energy Agency, told Radio VR in an exclusive interview that there is still time left though expressing concern that at the moment both sides are very far from each other.

“P5+1 has a very different view on what kind of a nuclear program Iran should have.” Heinonen stated. Still he stressed that “failure is not an option” and recalled that “previously, most of the progress was done in the last hours and last days of the negotiations.”


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