As the international community struggles with paths to respond and deal with Putin’s illegal war of aggression against Ukraine, looking to reinvigorate the Joint Common Plan of Action (JCPOA) (-Russia) agreement could provide an interesting part of the package. In addition to reducing potential Iranian movement toward Putin in a ‘coalition of the sanctioned’, ending of Iranian sanctions could reduce pressures in the global oil market (e.g., help contain/reduce price increases) due to Russia sanctions and could help reduce Russian revenue streams from oil exports.
Iranian oil exports are the range of one million barrels a day (mb/d) currently under the sanctions’ region with the portion exported going at a discounted rate to, for example, China (under the table) as part of sanctions’ busting efforts.
Iran has kept some exports flowing despite sanctions as intermediaries find ways to disguise the origin of the imports. Tanker tracking companies say China is the destination of most of those shipments.
Ending the sanctions, already well underway in discussions prior to Russia’s invasion, has the potential to lead to a rather rapid growth in Iranian oil exports from 1 to 2.5 mb/d. That additional Iranian oil could replace about one-third of Russia’s oil exports (which were about 4.3 mb/d in 2021) and ease the international (European, North American, developing world) economic pain created by serious sanctions against Russian oil and natural gas exports and revenues.
While the sanctions on Russia will foster new sanctions-busting activities (expanded Russian fossil fuel (oil and methane (natural gas)) exports to China at discounted from legal market rates seem likely), the United States entering back into the JCPOA offers the potential for somewhat fencing in Iranian nuclear weapons development activity while ending Iranian oil moving at discounted rates to global prices in ways that potentially are subsidizing the Chinese economy to the tune of $2-3B per year (with price discounts estimated to be between $4-$10 per barrel).
Bringing Iran back under international nuclear inspections and agreements is a risk-reduction move. The value of this is seriously increased
To be clear, this is not part and parcel of moves to address the climate crisis and accelerate the clean energy transition. A well-thought through engagement with Iran would include agreement for significant Iranian investment (using the resources from increased oil export revenues) in electrification, clean power, energy efficiency, and other moves to act on climate. And, while boosted global fossil-fuel use and production is not in humanity’s interest, a clean electron powered Iranian economy would free up more of Iranian production for export into the global market and help reduce ONG price pressures on global economic activity due to sanctioning Russia for Putin’s War of Aggression against Ukraine.