A couple of months ago, I told you about the deadline for Iranian nuclear negotiations.
Although the July 20th deadline had been set to reach an agreement over Iran’s nuclear ambitions, it turns out everyone decided to extend talks for another four months.
I can’t say I was honestly expecting a deadline to actually be a deadline these days — especially when politics are involved.
As it is now, Iran stands to lose the most from another four months in economic limbo while sanctions continue to cripple its economy.
Take a look at this…
Of course, it makes perfect sense that Tehran would want to expand its nuclear energy program considering 40% of the nation’s energy consumption comes from petroleum. Every barrel of oil they have to waste on domestic consumption is a barrel that is unavailable for export. Believe me, it’s starting to add up to a huge drain on revenue.
In other words, producing more nuclear energy means Iran could bank a considerable fortune off of the 155 billion barrels they hold in proved reserves.
Then again, we would be hard-pressed to find anyone optimistic enough to believe Iran isn’t also interested in building an atomic arsenal.
So it’s no surprise that both sides of the negotiation are hesitant to give away too much… yet this latest extension could cause serious problems.
Despite the fact that the two sides agreed on the talks last November (which was a huge step in the right direction), a four-month extension also means four more months of sanctions for Iran.
And according to OPEC data (as much as we can trust it, at least), these restrictions on oil sales to the EU have cut Iran’s crude exports by as much as 42%.
To put a little more perspective on this, Iran’s oil revenue dropped from $114 billion to $61 billion between 2011 and 2013. And by cutting their oil revenue in half, the U.S. and its allies have forced Iran to the negotiating table, even if a deal is still far off.
Iran can fully expect to lose even more export revenue as this situation is dragged out. Moreover, the details of these negotiations are being kept quiet.
According to one official, “There are still significant gaps on some core issues which will require more time and effort.”
How’s that for vague?
It’s not hard to imagine that another extension will happen four months from now, which means these talks will be well into their second year.
Until next time,