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Raisi backs Iran's JCPOA negotiating team but says trust issues with US an obstacle

Highlights

Hardline president-elect has endorsed nuclear deal

Iran eager to regain presanctions crude oil output

No date set for next round of Vienna JCPOA talks

Iran's current nuclear deal negotiating team will continue its work, hardliner President-elect Ebrahim Raisi said June 21, assuring that talks toward an agreement which could unlock sanctions on the country's oil sales would not be derailed by his victory.

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But Raisi, who will be inaugurated in August, said "broken promises" by the Trump administration had led to deep suspicions of US motives that would be difficult to overcome.

"Any negotiations that guarantee our national interests will be certainly supported," Raisi said in his first news conference since winning the June 18 presidential election. "But we will not bind the economic situation of the people and their welfare with these negotiations. We will not allow exhausting negotiations. Any meeting should bring along a result [and] should have an outcome for our people."

Raisi, a conservative judiciary chief, will succeed Hassan Rouhani, a more moderate president.

Iran, which was OPEC's third biggest producer as recently as late 2018, pumped 2.43 million b/d of crude in May, according to the latest S&P Global Platts OPEC survey, down from a presanctions high of 3.83 million b/d in May 2018.

Six rounds of talks in Vienna since April between the US, Iranian and European diplomats have failed to clinch a deal so far that would revive the 2015 Joint Comprehensive Plan of Action. The JCPOA relaxes sanctions restricting Iranian oil exports in exchange for nuclear concessions.

Iran has insisted the US backs off sanctions first as it unilaterally withdrew from the deal in 2018 under former President Donald Trump, while the US wants Iran to return to full compliance with the JCPOA before earning sanctions relief.

The JCPOA set a limit on Iran's uranium enrichment levels at 3.67%, but the country started 60% purity enrichment in mid-April.

The most recent round of Vienna talks concluded June 20, with diplomats returning for further consultations with their home governments. No date has yet been set for negotiations to resume.

Mikhail Ulyanov, Russia's envoy in Vienna, said in a comment on Twitter June 21 that officials could reconvene within a week or 10-12 days.

"The task is to make full use of this break to ensure that all participants get final political instructions on the remaining controversial issues," he said.

Awaiting Iranian oil

Many previous customers of Iranian crude, especially in Asia, are eager to resume buying but remain wary of incurring sanctions penalties.

Much of Iran's production is of heavier grades, which compete directly with crudes from Saudi Arabia, Iraq, Russia, Oman, Kuwait, Venezuela and Mexico, among others.

Iran also exports ultra-sweet low sulfur oil or condensates, which is similar to grades produced by Norway, Qatar, the US and Australia.

Iran's OPEC partners have been closely monitoring the nuclear talks, trying to ascertain when Iranian crude might begin returning to the market, as the alliance has yet to decide on its production quotas beyond July.

OPEC ministers have said they will accommodate any increased Iranian crude flows, hopeful that rising oil demand as the world continues to emerge from the pandemic will absorb any new supply. OPEC, Russia and several other partners in a production accord will meet July 1.

A few analysts said with the presidential race now decided, progress toward a nuclear deal could move forward, attributing the stalemate in negotiations to Iranian Supreme Leader Ali Khamenei not wanting to provide a boost to moderate candidates.

Although Raisi is not viewed as particularly friendly toward the West, the hardliner has said he is committed to the JCPOA. Diplomatic efforts to restore the pact have been endorsed by Khamenei, who controls all state affairs.

"We do not believe Iran would be at the table at all unless Supreme Leader Khamenei and Iran's ruling mullahs had green-lighted a return to bargain," ClearView Energy Partners said in a June 19 note. "In other words, we have little expectation for talks to collapse."

Standoff with the US

S&P Global Platts Analytics expects a JCPOA agreement could lead to sanctions relief by September, boosting Iran's crude and condensate exports to 1.5 million b/d by December from 600,000 b/d in May.

However, Khamenei's "mistrust of US intentions after the JCPOA backfired remains the largest obstacle, so a deal may admittedly never get done," Platts Analytics said in a June 17 note. "But he appears to desire sanctions relief if no concessions outside the JCPOA are required, in line with the US' initial goal."

In his press conference, Raisi, who is under US sanctions himself, criticized the "maximum pressure" campaign against Iran that began with the Trump administration, and said he would not speak to US President Joe Biden who has said restoring the JCPOA is a priority.

"My serious proposal to the US administration is to quickly fulfil their commitments and remove all the sanctions ... and show they are honest by removing all the sanctions," Raisi said. "The Iranian people are not happy with the JCPOA. They didn't feel the benefit of the JCPOA. The reason is the broken promises of the Americans."

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