The US and EU today waived sanctions targeting Iran's oil and petrochemical sectors after UN nuclear watchdog the IAEA confirmed Tehran has completed nuclear disarmament commitments agreed under the July 2015 deal with global powers.
The IAEA today confirmed Iran's compliance with the Joint Comprehensive Plan of Action, setting in motion the process of waiving US and EU sanctions imposed in 2012 that crippled Iran's crude exports and cost Iran an estimated $150bn in sales revenue.
Iranian president Hassan Rohani congratulated the negotiators, tweeting "I thank God for this blessing and bow to the greatness of the patient nation of Iran."
IAEA director general Yukiya Amano released the report after US secretary of state John Kerry, EU high representative for foreign affairs Federica Mogherini and Iranian foreign minister Mohammad Javad Zarif met in Vienna to discuss the final steps ahead of sanctions relief.
The EU and the US will lift their sanctions on Iran immediately, Mogherini and Kerry said following the release of the IAEA report. After the IAEA announcement, the White House issued an executive order lifting the US' nuclear-related sanctions.
Sanctions relief allows Iran to resume exports of crude to all destinations for the first time in four years. Iran, which produced 2.86mn b/d of oil in December, says it can increase production by 500,000 b/d when sanctions end. But some market participants doubt the increase will be as steep. The US Energy Information Administration expects Iran's crude output to grow by 300,000 b/d in 2016.
Expectations of Iran's imminent return to global oil markets has been among factors driving down crude prices in the past week. Nymex front-month light, sweet crude contract yesterday settled at $29.42/bl, its lowest since November 2003.
Iran's return to the markets coincides with a sharp deterioration of its relations with Saudi Arabia and the OPEC members in Riyadh's orbit, complicating efforts by Tehran to recapture the crude market share it lost because of the US and EU sanctions. But Iran signals its willingness to resume a regional role, with Zarif saying today "it is now time for all — especially Muslim nations — to join hands and rid the world of violent extremism."
The nuclear agreement that the US, the UK, France, Germany, Russia and China reached with Iran last year swapped oil and petrochemical sanctions for nuclear concessions. The IAEA concluded in December 2015 that Iran ceased all work on nuclear weapons in 2009. Iran in recent months reduced its stockpile of enriched uranium, dismantled centrifuges and destroyed the core of the Arak heavy water reactor - steps that will make it extremely difficult to resume clandestine work on a military nuclear program. The IAEA has been confirming Iranian compliance steps on the ground, allowing the agency and parties to the deal to move swiftly with the deal implementation.
The P5+1 group pledged support for the civilian nuclear program in Iran, under the IAEA's supervision.
Iran after the implementation day will be able to secure release of $50bn-$100bn of its assets held in international banks, the White House said yesterday.
Successful implementation of the nuclear deal is a political victory for both US President Barack Obama and Iran's Rohani. Both have invested significant political capital to overcome considerable domestic and regional challenges to the deal. Sanctions relief strengthens Rohani's position ahead of the Iranian parliamentary election scheduled on 26 February. And it gives Obama a rare major diplomatic accomplishment in the Middle East to bolster his claim of a "patient and disciplined strategy that uses every element of our national power."
Relations between Washington and Tehran are far from being normalized. Both countries say the nuclear agreement was a one-off deal that does not fundamentally change relations between them, and both have a long list of grievances against each other.
But Kerry has lauded the channels of communication and personal working relationships established between US and Iranian diplomats, which most recently helped to negotiate a swift release of US sailors whom Iran captured on 12 January.
Iran used today's occasion to announce the release of five American citizens of Iranian origin, including journalist Jason Rezaian, in exchange for the US commuting sentences on a number of individuals convicted of violating US sanctions on Iran, a list that includes US citizens.
The US will continue to maintain a stringent sanctions regime on Iran, which should prevent US companies from investing in that country's oil and natural gas industry. US companies "will be very careful" about engaging in Iran initially because of competition with European and other firms that already have been exploring business prospects in Iran and because of existing US sanctions, US Chamber of Commerce president Thomas Donohue said on 14 January.
