US and Iran to initiate indirect treaty talks on April 6

Houston — The United States will take the first steps toward indirect treaty talks with Iran on April 6 in Vienna as formal discussions begin with other nations involved in the 2015 nuclear agreement on how Iran can return to compliance.

While Iran is rejecting any direct talks for now without US concessions on lifting crude oil and other economic sanctions, the scheduled Vienna talks could lay out the road map for an eventual deal.

The Biden administration has called former President Donald Trump's so-called maximum pressure campaign a failure and President Joe Biden supports a return to something similar to the 2015 deal, but he has been clear that Iran must first take steps toward returning to compliance with the nuclear agreement.

The first public move toward any peace deal will be the Vienna talks with other nations involved in the 2015 deal, including European leaders, Russia and China, US State Department spokesman Ned Price said April 2.

"These remain early days, and we don't anticipate an immediate breakthrough as there will be difficult discussions ahead. But we believe this is a healthy step forward," Price said in a statement.

SANCTIONS RELIEF AN ISSUE

The primary issues for discussion are the nuclear steps that Iran would need to take in order to return to compliance with the terms of the 2015 deal, and the sanctions relief steps that the US would need to take in order to return to compliance as well, Price said.

While Iran will not participate in the Vienna talks, Price added that the United States "remains open to them."

In a subsequent phone briefing, Jalina Porter, the State Department's principal deputy spokeswoman, declined to delve into specifics or to name the US participants in the talks.

"This is a healthy first step forward," Porter said of the scheduled talks. "We definitely want to underscore that."

Porter said the end goal is a "mutual return of compliance" for both the US and Iran, and that the safe release of all US detainees from Iran remains a top priority.

EU CONFIRMS TALKS

The European Union on April 2 confirmed the planned Vienna talks, as well as the prospect of the United States' full return to the deal. The EU statement said the talks are scheduled "in order to clearly identify sanctions-lifting and nuclear-implementation measures, including through convening meetings of the relevant expert groups."

In part to pressure the US, Iran has invested more in its uranium enrichment program in recent months. The relations further deteriorated late last year as the Trump administration continued to tack on more sanctions and, in November, with the assassination of Iran's chief nuclear scientist, Mohsen Fakhrizadeh.

CRUDE VOLUMES

The Vienna announcement comes just days after Iran and China agreed March 27 on a sweeping 25-year trade and security cooperation pact that could lead to increased oil flows from Tehran to Beijing.

The deal -- signed by the two countries' foreign ministers -- also calls for cooperation on banking, finance and insurance. China is Iran's largest trading partner, with trade between the two countries totaling $18 billion in the Iranian year ended March 20, the official IRNA news agency said.

China has maintained some level of oil imports from Iran in the last few years, despite severe US sanctions that heavily penalize buyers of Iranian oil and blacklist them from the US financial system.

Because of the sanctions, Iran has resorted to increasingly creative methods to find outlets for its mainly heavy, sour crude, according to market sources. Many of the country's state-owned oil tankers have turned off their satellite tracking systems to cloak their shipments, and Iran is using ship-to-ship transfers to sell its oil at ports in the Persian Gulf and parts of Southeast Asia around Malaysia and Indonesia.

PRODUCTION DOWN SHARPLY

Iran, which historically has the capacity to produce more than 4 million b/d, has seen its production fall from an average of 3.55 million b/d in 2018 to below 2 million b/d for much of 2020. For context on the timing, the US implemented stricter new sanctions on Iran in May 2018 after abandoning the nuclear deal.

Iranian crude production has risen in recent months, hitting 2.14 million b/d in February, according to the latest S&P Global Platts survey of OPEC output -- a 190,000 b/d increase from a 33-year low of 1.95 million b/d in August. Much of that rise has come from higher volumes to China, buoyed further by climbing oil prices in 2021.

Data intelligence firm Kpler estimates Iran will export some 896,000 b/d of crude oil and dirty petroleum products to China in March, up from 406,000 b/d in February and the highest level since April 2019.