Amidst these conversations, surprisingly little attention has been given to one provision of the interim agreement that has governed each side’s obligations since last January. That provision, ostensibly limiting Iranian oil exports to approximately one million barrels per day for the duration of the interim period, may have been a topic of open defiance by the Iranian regime during the past six months. Furthermore, it may be indicative of US having a certain level of willingness to look the other way on such defiance.
A number of analysts have reported that Iran’s oil exports have consistently been in excess of its limits, with some of them adding as of a month ago that there was no longer any chance for the Islamic Republic to come into compliance for the average of the six-month interim period. Now, it has been reported that between January and June, Iran exported 1.27 million barrels per day to its six main buyers.
This is not, however, being widely reported as a violation of the interim agreement. Part of the reason for this is that the 1.27 million bpd figure includes condensates – a light form of refined oil the export of which is sometimes calculated separately from the heavier crude that makes up the bulk of exports. But another reason may relate to the Obama administration’s desire to give the impression of Iranian compliance in order to maintain an optimistic outlook on the now-extended talks.
This desire may explain the separation of condensates from the broader export figures, as persons familiar with the industry regard as somewhat arbitrary the separation of the two functionally similar forms of oil.
It is not clear that the isolation of different export figures even brings Iran into compliance with its obligations under the interim deal – an agreement that is now extended until November 24 as the talks proceed. But even if Iran can be said to have remained under the set export limits, this is unlikely to remain the case until the new deadline.
The current 1.27 million bpd figure reflects a two-year high in Iran’s oil exports, which in turn gives weight to earlier comments by Iran’s Oil Minister Bijan Zanganeh, who said that the nation would strive to export at the highest level possible, regardless of the negotiations. Thus, it is expected that in the second half of the year, those exports will climb by nearly a quarter of million bpd, to 1.5 million.
But just as Iran’s arguable violation of the export limits hasn’t drawn much scrutiny from the Obama administration or its allies, outright violation of the limits are not expected to change the situation. Robin Mills, an analyst at Manaar Energy Consulting & Project Management, was quoted by Bloomberg as saying that Iran is committed to steadily raising its export levels, while the US has shown willingness to give “wiggle room” when judging compliance.
In light of the deadline extension, the US clearly believes that it can obtain a final deal even in spite of early difficulties in eliciting Iranian cooperation under the terms of the temporary agreement. “The US won’t let oil exports get in the way,” Mills said.