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US, Iran to hold indirect talks over JCPOA on April 6

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Tehran — Iran wants the removal of Trump-imposed US sanctions before it scales back atomic activities under the 2015 nuclear deal, a senior official said ahead of a April 6 Vienna meeting that could draw a roadmap to normalize the country's oil trade.

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"We don't have any step-by-step plan or proposal, and we don't accept any. In our view, there is only one step and not more," Abbas Araghchi, Iran's deputy foreign minister for political affairs, said, according to state news agency IRNA. "The US should remove ... all sanctions that were reimposed after Trump's withdrawal from the JCPOA or newly imposed or relabeled ... and then we verify and return to our commitments."

The US and Iran are set to hold indirect talks in Vienna, along with the EU, China and Russia, in an attempt to resuscitate the nuclear deal, called the Joint Comprehensive Plan of Action, that waived sanctions on Iran's oil sector in exchange for restrictions on its nuclear activities. Then-President Donald Trump withdrew the US from the agreement in May 2018, reimposing the sanctions, prompting Iran to break some of its requirements under the deal.

Current President Joe Biden has said he supports a return to something similar to the 2015 pact, but has been clear that Iran must take first steps towards returning to compliance -- a parameter that Tehran has rejected.

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 shipped to China, in a direct challenge to the US, buoyed further by climbing oil prices in 2021.

Platts Analytics estimates Iran's crude and condensate exports averaged 825,000 b/d in Q1, up from 420,000 b/d in Q3 2020.

Market sources say accurately tracking Iranian shipments has been made challenging by cloaking methods used by Iran and its oil customers to avoid detection. Iranian officials have steadfastly refused to divulge any data on crude production or exports since sanctions were reimposed.

China, which recently signed a 25-year trade and security agreement with Iran, has called on the US to drop its sanctions, which include severe restrictions on Iran's oil sales and cutting the country's access to petrodollars. The insurance and shipment of Iranian oil tankers as well as the global money transfer SWIFT mechanism are also among Iran's top priorities.

"The final step which they should carry out, and we too, should be defined precisely. And this will be only worked out in our technical talks with the 4+1 countries," Araghchi said, referring to the remaining signatories of the deal -- China, France, Russia, the UK and Germany

RETURN OF DIPLOMACY

Saeed Khatibzadeh, spokesman of the foreign ministry, told reporters in his weekly press briefing on April 5 that Iran has already been able to sell crude in defiance of the sanctions.

"As for taking back Iran's share in the oil market, we have never waited and you can see it in the official and unofficial statistics," he said. "Those in the oil ministry who make these efforts have been selling oil despite these sanctions. Taking back the market will continue seriously as before."

Khatibzadeh praised China as an oil customer that has not refrained from publicizing its trade with Iran.

S&P Global Platts Analytics said it does not expect full sanctions relief to be negotiated until the late 2021, though a positive meeting in Vienna could allow for a framework agreement to be hammered out before Iran's June presidential election, accelerating a rise in Iranian oil exports.

"Both countries desire the same ultimate outcome, so a deal is likely [in] a matter of months, and the return of diplomacy should focus minds on finding a face-saving way to return to JCPOA compliance," Platts Analytics said in a note.

Iranian energy analyst Narsi Ghorban told Platts that Iran's oil production has been quick to come back in the past, citing the rapid rise from when the JCPOA was struck. Iranian crude production averaged 2.87 million b/d in 2015, surging to 3.48 million b/d in 2016 and 3.79 million b/d in 2017, according to Platts OPEC survey records.

Iran has historically had the capacity to pump more than 4 million b/d of crude.

Global vaccination campaigns and robust economic growth in China and other oil demand centers have boosted oil prices in recent months, but Iran will now have to compete against its OPEC+ counterparts, who on April 1 agreed to hike their production quotas by a combined 1.14 million b/d from May through July, in monthly increments. Iran, along with Libya and Venezuela, has been exempt from OPEC+ quotas since they were implemented in 2017.

"If the sanctions are not lifted, the scenario will be the same as it is now. Iran will be selling an amount of oil, no data will be publicized and it will be a guessing game to assess how much," Ghorban said. "Right now, ambiguity casts a shadow on Iran's oil exports."

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