Iran’s Latest Move Brings A New Nuclear Deal With The U.S. Closer

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Yves here. Even with Alexander Mercouris correctly calling out American diplomacy with respect to the Ukraine war (and China) as sterile, there is still some progress on important fronts. But how much of the the possible thaw with Iran is due to China having brokered a deal between the Saudis and Iran putting the US on the back foot?

Scott Ritter also argued (I discussed this only in comments, and due to the state of search, can’t find the video clip or the write-up here) that Israel had disastrously lost war games v. Iran, and word had gotten out, which Ritter argued very much put Iran and Hezbollah in a stronger position.

By Simon Watkins, a former senior FX trader and salesman, financial journalist, and best-selling author. He was Head of Forex Institutional Sales and Trading for Credit Lyonnais, and later Director of Forex at Bank of Montreal. He was then Head of Weekly Publications and Chief Writer for Business Monitor International, Head of Fuel Oil Products for Platts, and Global Managing Editor of Research for Renaissance Capital in Moscow. He has written extensively on oil and gas, Forex, equities, bonds, economics and geopolitics for many leading publications, and has worked as a geopolitical risk consultant for a number of major hedge funds in London, Moscow, and Dubai. Originally published at OilPrice

  • The release of five American citizens from prison in Iran has raised the chances of a successful new version of a nuclear deal.
  • A new deal will involve the unfreezing of monies due to Iran for oil sold to several countries before the U.S. reimposed sanctions.
  • The previous version of the nuclear deal that was implemented on 16 January 2016 aimed directly or indirectly at destroying the power of the Islamic Revolutionary Guard Corps.

The deal announced on 11 September that saw five Americans released from prison in Iran has brought the quiet ongoing discussions over a new, watered-down version of the Joint Comprehensive Plan of Action (JCPOA) – colloquially known as the ‘nuclear deal’ – “much closer to fruition”, a senior figure in the European Union’s (E.U.) energy security complex exclusively told last week. “Part of the new [JCPOA] will involve the unfreezing of monies due to Iran for oil sold to several countries before the U.S. reimposed sanctions on payments being made to Iran, after its withdrawal from the original JCPOA in May 2018,” he said. “This unfreezing of [US$6 billion in] money due to Iran from oil sold to South Korea would be done anyway under the new JCPOA, so it being done ahead of the deal being officially agreed and announced is a show of good faith on the U.S.’s part and releasing the U.S. prisoners is the same on Iran’s part,” he underlined.

As it stands, and as exclusively broken in back in early July, the core of a new JCPOA has been agreed. It will not include any of the U.S.’s tough clauses in the previous version that was implemented on 16 January 2016 aimed directly or indirectly at destroying the power of the Islamic Revolutionary Guard Corps (IRGC) in Iran. The core elements of the IRGC had been instrumental in the Iranian Revolution that culminated on 11 February 1979 with the Iranian monarchy officially being brought down and then replaced by Ayatollah Ruhollah Khomeini. From that point, these elements of the IRGC have been regarded as the guardians of that Islamic Revolution and responsible for spreading Iran’s own brand of Islam across the world.

Crucially from the IRGC’s and Iran’s perspective, the new version of the JCPOA will not include a cast-iron agreement on Tehran’s part to sign up to the Financial Action Task Force (FATF). This had long been the key sticking point for Iran, as the FATF would have destroyed the IRGC’s ability to fund itself and to fund its international proxies abroad. It has been able to fund itself for decades through a vast network of revenue-generating stakes in hundreds of companies across Iran and internationally, as analysed in my new book on the new global oil market order.

By the time that the JCPOA was agreed on 14 July 2015, the U.S. view was that the IRGC has placed senior operatives at the heart of more than 200 Iranian companies, including the National Iranian Oil Company (NIOC), the National Iranian Gas Company, and the National Iranian Tanker Company. These revenues were then moved seamlessly through a network of domestic and international financial institutions – for a long time including high-profile banks in Europe and Asia – to enable the field operations of both the IRGC and its international proxies. The U.S. had hoped that by engaging with Iran through the JCPOA from 2015 the IRGC’s influence could be diminished. However, then-Iranian President Hassan Rouhani was unable to effect such a change for several reasons, also analysed in full in my new book.

Several of the activities that lie at the heart of the purpose of the IRGC would be made much more difficult, if not impossible if Iran signed up to the FATF. A precursor to the U.S.’s intended dismantling of the IRGC’s power within Iran was its designation by Washington in April 2019 as a ‘Foreign Terrorist Organisation’ (FTO). And one of the key intentions behind the FATF is to preclude funding for terrorism, and Iran knows it. There are 40 active criteria and mechanisms in place in the FATF to prevent money laundering (an activity that is vital to the IRGC’s activities across the world) and nine criteria and mechanisms in place to do the same for the financing of terrorism and related activities (a core of the IRGC’s role in promoting Iran’s brand of Islam around the globe). The FATF also has swingeing powers to wield against individuals, companies, or countries who transgress any of its standards. So intent was the U.S. previously on eradicating the influence of the IRGC in Iran that it made it clear that even if Iran did sign up to the FATF, Washington would not remove the designation of the IRGC as an FTO immediately. Rather, it would keep the damaging designation in place for at least two years, whereupon it would be reviewed. In the draft of the new version of the JCPOA, though: “Iran will merely have to indicate that it will make efforts towards aligning itself towards the FATF’s goals at some point in the future,” the E.U. energy security source told

For its part, the U.S. will not drop its designation of the Islamic Revolutionary Guards Corps as a Foreign Terrorist Organisation. However, as indicated in the US$6 billion unfreezing of money due to Iran from South Korea last week, it will allow the sanctions against Iranian oil and gas exports to be gradually rolled back. One major positive of this limited JCPOA from the U.S. perspective is that it addresses the key Israeli fear regarding Iran – that it manufactures a nuclear weapon of some sort sooner rather than later. As the U.S.’s key ally in the Middle East, Israel had repeatedly told Washington since late 2021 that Iran was no longer ‘years’ away from being able to create a nuclear weapon but rather just two weeks away, in fact.

On more than one occasion, according to the E.U. source, Israel told the U.S. that it was going to ‘decisively’ deal with the threat from Iran itself. Given the pattern of previous wars between Israel and its Arab neighbours, and the support likely to be given to the big Middle Eastern oil producers by China and Russia in the new global oil market order, the U.S. knew the danger of escalation into a superpower nuclear conflict that this might mean. This has added further impetus to the drive to get a new nuclear deal into operation as soon as possible. Therefore, a key pledge for Iran in the new limited version of the JCPOA is that it will keep uranium enrichment at or below 60 percent and that it agrees to regular inspections once again from independent nuclear watchdogs.

An economic reason was also behind the U.S.’s initial efforts to re-engage in negotiations towards a new version of the JCPOA, and this is that bringing Iranian oil and gas into the global energy market should help bring prices down. With repeated extensions of oil production cuts by Saudi Arabia and Russia, higher prices have again fuelled already-high inflation in the economies of the U.S. and its key allies in the West and the East, bringing with it the threat of deep economic and political problems, as also analysed in my new book on the new global oil market order. As highlighted by several times since 2018, Iranian crude oil and condensate production could bounce back very quickly after Iran’s Petroleum Ministry orders the NIOC to ramp up production.

According to a senior analyst at global energy markets intelligence company Kpler, spoken to exclusively by at the time the U.S. had re-opened negotiations, Iran could see an 80 percent recovery of full production within six months and a 100 percent recovery within 12 months. “Ultimately, we believe Iranian production could technically jump by 1.7 million bpd including 200,000 bpd of condensate and LPG/ethane, in a 6-to-9-month period from when sanctions are lifted and an immediate impact of a 5-10 percent fall in the oil price would be likely,” the analyst concluded.

It is apposite to note at this point that last week’s deal between the U.S. and Iran is not the first time that a similar deal has been used as a precursor to a new nuclear deal being done. As examined in full in my new book on the new global oil market order, the first week of December 2019 witnessed a high-level exchange of prisoners between the U.S. and Iran take place in Switzerland. During the exchange, the U.S. – for the first time since withdrawing from the original JCPOA in May 2018 – made it clear that it would resume negotiations with Iran on the removal of sanctions “with no preconditions.” Iran made it equally clear that it saw the prisoner exchange as the road to re-engaging in the JCPOA, without the removal of sanctions by the U.S. being required beforehand. The negotiations towards that deal fell through for reasons analysed in the book, and what that meant was that for any new deal – such as the one being discussed now – to get over the finish line, shows of good faith would have to be made from each side: exactly as has just happened.

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  1. NN Cassandra

    Interesting to read the bit about FATF. Hard to believe someone though that just by sitting in office in NY and flipping some numbers, they can micromanage what factions have power in sovereign, hostile, and already sanctioned-to-death country like Iran.

    1. GramSci

      I don’t believe FATF bureaucrats have much direct control over the Islamic Revolutionary Guard Corps; they would have more control over the IRGC’s customers.

      I wonder if these diplomatic moves will serve to bring down pump prices before next November…

    1. John Steinbach

      In other words the U.S. is “not agreement capable.”

      Iran’s future lies in its participation in BRICS, not rapprochement
      with the U.S. The original JCPOA was a dagger aimed at the heart to Iran’s sovereignty & security as undoubtedly will this one.

    2. Carolinian

      Bible Belt or the Israeli lobby belt. I doubt the former has a huge interest in Iran except insofar as it is stoked by the latter.

      1. Darius

        The right has had it in for Iran since the hostage crisis. I think many of them by now have forgotten why the thought of Iran makes them see red. This now stereotypic hatred is manipulated by Israel and the financial elite, which can’t tolerate a foreign power not in their orbit.

  2. The Rev Kev

    Pretty sure that at this point that Iran would have zero trust in the US. Biden could have re-entered the deal when he became President but he didn’t and he must be kicking himself for that move. If he thinks that he can make a deal and all the Iranian oil and gas coming online into the world makret would lower prices and help him being re-elected them he is very misguided. I believe that for Iran to do so would take years of effort and there would be no guarantee that the US would not crack down on Iran if old Joe gets re-elected again. But a factor is how Israeli’s Netanyahu and his crackpot coalition would react. They keep on saying that Iran is about to get the bomb but they have been saying that since the 90s. Still waiting. And that they keep on saying that they are about to attack but the truth is that they won’t do that but will want the US to do that for them. Israeli soldiers would not take part because that would look bad in this region so expect American casualties by the tens of thousands – on Israel’s behalf. Swapping hostages, errrr, prisoners may be a good start but you need a solid sustained effort to carry through a successful policy. And in Washington there are too many political fiefdoms fighting each other for that to happen.

  3. Gregorio

    Why would Iran even waste their time on any kind of deal with the U.S., considering that it’s highly likely to be tossed out after the next election? The U.S. has proved time and again that it’s not an honest broker when it comes to arms control agreements.

    1. Chas

      That’s a good question. Yet Iran just released its US prisoners without receiving in Iran the $6 billion promised by the US. Thus, it looks like Iran now thinks the USA is agreement capable.

  4. Matthew G. Saroff

    I am not sure how Iran can cut a deal with the US without strong guarantees from 3rd parties that they will not comply with US actions that abrogate the deal.

    Simply put, the US cannot be trusted to stick to its agreements.

  5. Roger

    Basically Biden’s administration has emptied half the US Strategic Oil Reserve in a failed attempt to keep down oil prices and desperately needs the previously sanctioned oil producers (Iran and Venezuela) to increase production as OPEC+ has reasserted its control over oil prices (now headed for US$100+) and the US needs to get inflation down. The JCPOA was done after oil prices had crashed in 2014 and the US thought that fracking would produce a global oil surplus for many years. Trump committed a huge foreign policy error by ending the JCPOA (and murdering Soleimani) and the current administration made things worse with their attempts to strong arm Iran in 2021. So the end result is that the US will get a much worse deal after destroying its own position in the Middle East.

    The IRGC is certainly not a terrorist organization, it is at the core of Iranian independence. The same with Hamas as it is a nationalist force. For the US a terrorist organization is any organization that gets in the way of its foreign policy. The ANC was deemed to be a terrorist organization for quite a while. The British called George Washington a terrorist. Such labels lose much of their meaning in political discourse.

    The article does repeat the Israeli BS about them being scared of Iran getting a bomb, which is actually against the explicit statements of Iran’s religious leader. Also, the assumption that Iran could be an aggressor when it has always acted in a defensive way; attacked by Iraq in the the Iran-Iraq War, helping Syria to withstand the attacks from foreign funded terrorists, fighting ISIS etc. Israel is actually much more of a religious regime than Iran, which has a strong institutional and cultural delineation between religion and politics. Jews live in peace and with full social and economic rights in Iran, that certainly cannot be said for Muslims in Israel.

    1. Hickory

      Part of the point of those labels like terrorist is actually to confuse political discourse. It makes it harder for non-insiders to have calm thoughtful convos about reality and how to respond.

  6. Altandmain

    The article’s conclusion is far too soft. Given how the US unilaterally withdrew from the JCPOA, it would be quite understandable that the Iranians are reluctant to sign a new treaty.

    The Iranian people have plenty of reasons to distrust the US. The US did a regime change operating in 1953 and waged a brutal sanctions economic attack after 1979 and the US backed Shah was overthrown.

    The there’s the matter of the US being in decline now. The future may be a lot brighter for Iran, especially now with the Russians, Chinese, and rest of BRICS onside, including the Saudis, which the Iranian government recently got a peace deal with.

  7. some guy

    Hopefully Big Guy will give up on various sweeteners and trophy add-ons and just achieve a restoration of the prior clean deal with Iran. Hopefully just before the election.

    That way, when Trump becomes President again, he can cancel it all over again.

  8. MFB

    It’s very unlikely that the deal betwee Iran and the US is aimed at improving Iranian-US relations. Most likely it is aimed at improving Iran’s relations with other countries which would be pleased to see Iran showing its willingness to compromise and cooperate.

    1. Polar Socialist

      I don’t think it’s Iran’s willingness to compromise and cooperate that has been questioned. Last time i checked, the hard-liners won elections there because the moderates failed to get anything back for their effort to appease The West.

      Somehow all this sounds to me like The West negotiating with itself again – Iran has no reason to trust the other side at all. Unless there’s an enforceable mechanism of UN sanctions on the party that violates the next treaty for any reason.

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