According to Bloomberg, a deal between the US and Iran over easing sanctions is already effectively taking place, despite any revival of the 2015 nuclear deal.
Bloomberg reports that after months of diplomacy behind closed doors, progress has been made on unlocking Iranian oil revenue that is worth $6 billion but is stuck in South Korea and exchanging prisoners. There are also reports that the build-up of enriched uranium has drastically slowed down in Iran, possibly as part of an informal agreement to relax its sanction enforcement on oil exports, most of which are destined for China.
RBC Capital Markets LLC’s head of global commodity strategy, Helima Croft, said to Bloomberg:
“It’s the traditional energy diplomacy game: cutting deals to get additional barrels. US and Iranian economic interests are aligned when it comes to more barrels on the market.”
Iran’s oil production has been recovering recently, with it hitting 3 million barrels per day (bpd) in July, the highest since President Trump abandoned the nuclear deal in 2018. Iran’s government expects production to soon reach 3.4 million bpd, and possibly 3.6 million bpd by the end of the year.
With output from US oil and lubricant companies like ExxonMobil growing only gradually, the flow of Iranian oil is helping to keep prices from climbing. The price of Brent crude eased below $85 per barrel this week, which will help some businesses and consumers that have been struggling with the recent inflation.
