Iran claims that the U.S. should pay Tehran as much as US$70 billion as compensation for lost oil revenues due to the U.S. sanctions, as a prerequisite for a return to the nuclear deal.
Kamal Kharrazi, the chairman of Iran’s Strategic Council on Foreign Relations—a body advising Iran’s Supreme Leader Ayatollah Ali Khamenei—said this payment would be a prerequisite if U.S. President-elect Joe Biden wants to return to the so-called Iranian nuclear deal, according to the state-run Islamic Republic of Iran Broadcasting, quoted by Bloomberg.
Incumbent U.S. President Donald Trump withdrew from the nuclear deal in 2018, slapping sanctions on Iran’s oil, shipping, and banking industries and threatening sanctions on anyone dealing with Iran. Major foreign companies, such as France’s oil supermajor Total, hastened to pull out of energy projects in Iran because of potential secondary U.S. sanctions for doing business with the Islamic Republic.
President-elect Biden has pledged to offer Iran a path back to diplomacy and a return to the nuclear deal. If the U.S. and Iran return to a path of diplomacy, there is a chance that the strict U.S. sanctions on Iran’s oil exports could be eased, potentially paving the way for around 2 million bpd of Iranian crude oil exports returning to the market.
Last month, Iranian authorities seemed confident they could be able to sell as much as 2.3 million bpd of oil in the next Iranian year that begins in March 2021, according to Iran’s budget bill.
The bill assumed that Iran would get revenues from the sale of 2.3 million bpd of oil in the year starting in March.
Iran continues to export oil, albeit in much lower quantities, despite the maximum pressure campaign of the U.S. and its efforts to bring Iranian oil exports down to zero. Iran doesn’t officially report exports or production and resorts to various inventive ways to hide the true origin of the oil it exports.
By Charles Kennedy for Oilprice.com
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However, making the United States pay compensation as a prerequisite for its return to the nuclear deal is next to impossible let alone paying compensation amounting to $70 bn.
President-elect Joe Biden says he's prepared to re-join the Iran nuclear deal if Iran returns to strict compliance but he wouldn't lift sanctions until then. However, Iran has made it absolutely clear that it isn’t prepared to enter into negotiations with the United States until US sanctions are lifted or at least significantly eased.
I doubt very much that US sanctions against Iran will ever be lifted. The reason is that the United States egged by Israel will demand in return that Iran stop its nuclear and ballistic missile developments something Iran will never ever accede to.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London