Potential For Progress In Nuclear Talks Remains


BMI View: Although latest talks between Iran and the 5+1 powers on the Islamic Republic's nuclear programme ended short of a deal on November 10, potential for progress in negotiations remains. We see both upside and downside risks to upcoming talks, and expect oil prices to remain sensitive to developments.

Talks in Geneva between Iran and the so-called 5+1 powers (the United States, Russia, China, France, Britain and Germany) on the Islamic Republic's nuclear programme ended short of a deal on November 10. Talks seemed on the verge of a breakthrough according to US officials. However, prospects of a deal waned after French Foreign Minister Laurent Fabius dismissed the plans as a "fool's game" of one-sided concessions. That said, US Secretary of State John Kerry said the US and Iran have "narrowed differences" and made "significant progress", while Iranian Foreign Minister Mohammad Javad Zarif said that differences among the parties were to be expected and that he was pleased all were "on the same wavelength".

Discussions left questions about the Islamic Republic's willingness to suspend its nuclear- enrichment activities unresolved, as well as the possibility that the West could ease economic sanctions on Iran. We believe that a deal would not have been clinched even without France's opposition. Indeed, France was simply more vocal about unresolved issues that also concerned other nations. Given that France has maintained better relations with Iran than the US and UK, Fabius was better positioned than his counterparts to announce that a deal was still out of reach. New talks will take place on November 20 in Geneva. Meetings will be at a lower level than those which have just taken place, and are unlikely to include all foreign ministers, an indication that officials will likely work on technical details. Although we do not expect a major breakthrough to take place in upcoming talks, potential for significant progress in negotiations remains.

Oil Prices Sensitive To Developments
Brent Oil Prices, US$/bbl

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This article is tagged to:
Sector: Country Risk
Geography: Iran

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