Iran nuclear deal: Oil slips $1 on news of historic agreement

Iran nuclear deal faces stiff opposition in Congress

The deal to curb the Iran nuclear program will far reaching effects, not the least of which is allowing the Middle East nation to export an additional million barrels a day of oil at a time when global markets are oversupplied.

Iran nuclear
Iranian Oil Minister Bijan Zanganeh.

After 18 days of intense and often fractious negotiation, world powers and Iran struck a landmark deal Tuesday to curb Iran’s nuclear program in exchange for billions of dollars in relief from international sanctions – an agreement designed to avert the threat of a nuclear-armed Iran and another U.S. military intervention in the Muslim world.

The accord will keep Iran from producing enough material for an atomic weapon for at least 10 years and impose new provisions for inspections of Iranian facilities, including military sites. And it marks a dramatic break from decades of animosity between the United States and Iran, countries that alternatively call each other the “leading state sponsor of terrorism” and the “the Great Satan.”

The deal “is not built on trust, it is built on verification,” President Barack Obama declared from the White House, in a statement carried live on Iranian state TV. He said all potential pathways to an Iranian nuclear weapon have been cut off.

In Tehran, Iranian President Hassan Rouhani said “a new chapter” has begun in his nation’s relations with the world.

The two leaders spoke moments after the formal announcement of the so-called Joint Comprehensive Plan of Action, whose completion comes after more than two weeks of furious diplomacy during which negotiators blew through three self-imposed deadlines. The top American and Iranian diplomats both threatened at points to walk away from the talks.

Iran nuclear
John Kerry, American Secretary of State.

On Tuesday in Vienna, however, all sides hailed the outcome. Announcing the accord, Federica Mogherini, the European Union’s foreign policy chief, said diplomats “delivered on what the world was hoping for _ a shared commitment to peace and to join our hands to make our world safer.” The deal, she said, ensures that Iran’s nuclear program “will be exclusively peaceful.”

In a final negotiating session with his counterparts from the United States, Britain, China, France, Germany and Russia, Iranian Foreign Minister Mohammad Javad Zarif said, “We are reaching an agreement that is not perfect for anybody, but it is what we could accomplish, and it is an important achievement for all of us.”

Secretary of State John Kerry, who did most of the bargaining with Zarif, said persistence paid off. “Believe me, had we been willing to settle for a lesser deal we would have finished this negation a long time ago,” he told reporters.

Iran nuclear deal: Effect on oil prices

Iran and six world powers began a final meeting in Vienna Tuesday to ratify a historic agreement on Iran’s nuclear program that will lead to the removal of sanctions and increased flows of Iranian oil onto world markets.

Brent crude was trading around $56.80/barrel at 1000 GMT, roughly a dollar below Monday’s close after news of the deal broke.

Iranian Oil Minister Bijan Zanganeh welcomed the deal.

“One hundred thousands times thanks to God that the country will enter an era of blossoming and hope after an era of hardship,” Zanganeh told Iranian weekly Seda. “After this stage and all efforts to break and bypass the sanctions in the oil sector, with this deal, our job is just starting.”

Iran is currently exporting around 1 million b/d of crude, less than half the 2.2-2.3 million b/d exported before the European Union and US imposed crippling oil and financial sanctions in mid-2012.

Iran nuclear
American President Barack Obama.

Iran nuclear deal: Key compromises

Iran agreed to the continuation of a U.N. arms embargo on the country for up to five more years, though it could end earlier if the International Atomic Energy Agency definitively clears Iran of any current work on nuclear weapons. A similar condition was put on U.N. restrictions on the transfer of ballistic missile technology to Tehran, which could last for up to eight more years, according to diplomats.

Washington had sought to maintain the ban on Iran importing and exporting weapons, concerned that an Islamic Republic flush with cash from the nuclear deal would expand its military assistance for Syrian President Bashar Assad’s government, Yemen’s Houthi rebels, the Lebanese militant group Hezbollah and other forces opposing America’s Mideast allies such as Saudi Arabia and Israel.

Iran nuclear deal: American political response

Democrats are expressing skepticism about the landmark Iran nuclear deal the U.S. and its partners reached with Tehran.

Many Republicans, as expected, are vehemently opposed to the agreement.

After receiving a copy of the agreement, lawmakers will have 60 days to review it, vote yes or no _ or take no action.

Obama says he’ll veto any legislation that prevents the successful implementation of the deal.

Iran nuclear deal: Support from China, Russia

Iranian leaders insisted the embargo had to end as their forces combat regional scourges such as the Islamic State. And they got some support from China and particularly Russia, which wants to expand military co-operation and arms sales to Tehran, including the long-delayed transfer of S-300 advanced air defence systems _ a move long opposed by the United States.

Another significant agreement will allow U.N. inspectors to press for visits to Iranian military sites as part of their monitoring duties, something the country’s supreme leader, Ayatollah Ali Khamenei, had long vowed to oppose. However, access isn’t guaranteed and could be delayed, a condition that critics of the deal are sure to seize on as possibly giving Tehran time to cover up any illicit activity.

Under the accord, which runs almost 100 pages, Tehran would have the right to challenge the U.N request and an arbitration board composed of Iran and the six world powers would then decide on the issue. The IAEA also wants the access to complete its long-stymied investigation of past weapons work by Iran, and the U.S. says Iranian co-operation is needed for all economic sanctions to be lifted.

IAEA chief Yukiya Amano said Tuesday his agency and Iran had signed a “roadmap” to resolve outstanding concerns, hopefully by mid-December.

The economic benefits for Iran are potentially massive. It stands to receive more than $100 billion in assets frozen overseas, and an end to a European oil embargo and various financial restrictions on Iranian banks.

But it didn’t come easily, as tempers flared and voices were raised during debates over several of the most contentious matters. The mood soured particularly last week after Iran dug in its heels on several points and Kerry threatened to abandon the effort, according to diplomats involved in the talks. They weren’t authorized to speak publicly on the private diplomacy and demanded anonymity.

By Monday, however, the remaining gaps were bridged in a meeting that started with Kerry, Mogherini and Russian Foreign Minister Sergey Lavrov, and then involved the Iranians. A half-hour after Zarif’s inclusion, the ministers emerged and told aides they had an accord.

The deal comes after nearly a decade of international, intercontinental diplomacy that until recently was defined by failure. Breaks in the talks sometimes lasted for months, and Iran’s nascent nuclear program expanded into one that Western intelligence agencies saw as only a couple of months away from weapons capacity. The U.S. and Israel both threatened possible military responses.

The United States joined the negotiations in 2008, and U.S. and Iranian officials met together secretly four years later in Oman to see if diplomatic progress was possible. But the process remained essentially stalemated until summer 2013, when Hassan Rouhani was elected president and declared his country ready for serious compromise.

More secret U.S.-Iranian discussions followed, culminating in a face-to-face meeting between Secretary of State John Kerry and Iranian Foreign Minister Mohammad Javad Zarif at the United Nations in September 2013 and a telephone conversation between Rouhani and President Barack Obama. That conversation marked the two countries’ highest diplomatic exchange since Iran’s 1979 Islamic Revolution and the ensuing hostage crisis at the American embassy in Tehran.

Kerry and Zarif took the lead in the negotiations. Two months later, in Geneva, Iran and the six powers announced an interim agreement that temporarily curbed Tehran’s nuclear program and unfroze some Iranian assets while setting the stage for Tuesday’s comprehensive accord.

It took time to get the final deal, however. The talks missed deadlines for the pact in July 2014 and November 2014, leading to long extensions. Finally, in early April, negotiators reached framework deal in Lausanne, Switzerland, setting up the last push for the historic agreement.

The disputes are likely to continue, however. In a foreshadowing of the public relations battle ahead, Iranian state TV released a fact sheet of elements it claimed were in the final agreement _ a highly selective list that highlighted Iranian gains and minimized its concessions.

Among them was an assertion that all sanctions-related U.N. resolutions will be lifted at once. While a new U.N. resolution will revoke previous sanctions, it will also re-impose restrictions in a number of categories.

Beyond the parties to the pact, spoilers abound.

In the United States, Congress has a 60-day review period during which Obama cannot make good on any concessions to the Iranians. U.S. lawmakers could hold a vote of disapproval and take further action.

Iranian hardliners oppose dismantling a nuclear program the country has spent hundreds of billions of dollars developing. Khamenei, while supportive of his negotiators thus far, has issued a series of defiant red lines that may be impossible to reconcile in a deal with the West.

And further afield, Israel will strongly oppose the outcome. It sees the acceptance of extensive Iranian nuclear infrastructure and continued nuclear activity as a mortal threat, and has warned that it could take military action on its own, if necessary.

The deal is a “bad mistake of historic proportions,” Israeli Prime Minister Benjamin Netanyahu said Tuesday, adding that it would enable Iran to “continue to pursue its aggression and terror in the region.”

Sunni Arab rivals of Shiite Iran are none too happy, either, with Saudi Arabia in particularly issuing veiled threats to develop its own nuclear program.

With files from the Canadian Press.