Iran Closer to Lifted Sanctions on Exports

Iranian Oil Terminal

By MarEx 2015-04-06 19:33:13

On Monday, Saudi Arabia’s cabinet stated that it is open to an interim agreement between Iran and world powers over Iran’s nuclear power. The deal, which negotiators hope to have finalized by June 30, is aimed at removing weapons of mass destruction from Iran.

Iran, the United States, Britain, France, Germany, China and Russia reached an agreement on Thursday that would slow Tehran’s nuclear research for at least 10 years and begin to lift Western sanctions. Iran’s shipments overseas have been decreased by an estimated 50 percent by sanctions put in place in 2012.

Brent crude tumbled nearly 4 percent on Thursday when the framework agreement was announced. But initial expectations of a quick recovery in oil exports were tempered by views that it could take longer than expected to roll back sanctions.

Iran's foreign minister said on Saturday that U.N. sanctions would be lifted immediately after a deal, but the United States released a fact sheet on Thursday saying that sanctions would be lifted as Tehran demonstrates compliance with any deal.

Uncertainty remains about exactly when sanctions on Iran would be lifted if a deal is reached in June.

"While clearly a bearish headline, a final deal and full lifting of sanctions still faces a number of obstacles," Morgan Stanley analysts said in a research note. "Even if a final deal is reached, we do not expect any physical market impact before 2016," the analysts said.

Iran holds the world’s fourth-largest crude reserves, and with sanctions lifted the country could increase output by 800,000 barrels a day to eventually reach its full capacity of 3.6 million.