Iranian nuclear deal negotiators appear close to clinching a deal, bringing the prospect of significant supplies coming on to a tightening oil market and intensified intra-OPEC+ competition.
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Both sides have signaled that an agreement could come within days. Iran's foreign ministry said Feb. 21 the negotiations had progressed considerably, with two or three remaining issues left to be resolved.
"We are still waiting for the EU-US decisions but so far have seen no determination from them," a ministry spokesman said.
Reports indicate that the deal could involve a gradual lifting of sanctions in stages.
The US, under former President Donald Trump, reimposed the sanctions in 2018, dealing a harsh blow to Iranian crude production and exports, though market sources have said some shipments have been able to evade detection and enforcement, particularly to Asia.
Iran pumped 2.52 million b/d of crude in January, according to the latest S&P Global Platts survey of OPEC output. That compares to as high as 3.83 million b/d in some months of 2018.
Platts Analytics expects that an interim deal could allow Iranian exports to grow by 500,000 b/d in April and May, while a comprehensive agreement could allow 1.5 million b/d of export growth within nine months of sanctions relief.
Many of those initial barrels are likely to come out of Iran's floating storage volumes, which have ballooned from 13.8 million barrels to 42.5 million barrels in the last two years, according to commodity data firm Kpler.
An agreement would be the US' biggest lever to provide oil price relief to American consumers.
But it would increase competition for several of Iran's OPEC+ counterparts.
Iran's crudes are mostly classified as medium sour grades due to their high sulfur content and with specific gravities ranging from 27 to 34 API.
That pits them directly against grades such as Saudi Arabia's Arab Heavy, Arab Light and Arab Medium; Iraq's Basrah Light, Basrah Medium and Basrah Heavy; Russia's Urals; the UAE's Upper Zakum; Oman Crude Blend; Kuwait Export Crude; Venezuela's Mesa 30 and Merey 16; and Mexico's Mata, among others.
Biden has been under pressure to stem the rise in oil prices and bring down record inflation, and has called on OPEC and its allies to raise production more aggressively, though Saudi Arabia, its largest member, has stuck to its quotas and steadfastly declined to tap its spare production capacity.
Tensions between the west and Russia over Ukraine have also contributed to a geopolitical risk premium of as much as $20/b, according to Platts Analytics.
Platts assessed Dated Brent at $97.35/b on Feb. 18, after the benchmark had breached the $100/b threshold for the first time since September 2014 earlier in the week.