Raishi "Won't Meet Biden" VS White House "Not a Dialogue Partner"... International Oil Prices Surge (Summary)

Sharp Tensions with the U.S. Since Before Taking Power... Nuclear Deal Expected to Face Difficulties
Expectations for Iranian Crude Oil Supply Dashed, Oil Prices Surge..."Upward Trend Continues"

[Image source=EPA Yonhap News]

[Asia Economy New York=Correspondents Baek Jong-min and Lee Hyun-woo] Since the Iranian presidential election, a sharp war of nerves has erupted between President-elect Seyyed Ebrahim Raisi of Iran and the U.S. Biden administration, with both sides stating there is no intention for mutual talks. Amid the strong standoff between the two countries, the restoration negotiations of the Iran nuclear deal (JCPOA - Joint Comprehensive Plan of Action) are increasingly likely to reach a deadlock. Concerns that the U.S. will maintain sanctions against Iran, making it difficult for Iranian oil to return to the market, caused international oil prices to surge.

On the 21st (local time), White House Press Secretary Jen Psaki emphasized at a press briefing, "President Biden's counterpart for dialogue is not the Iranian president but the decision-maker, the Supreme Leader (Ayatollah Seyyed Ali Khamenei)," adding, "This has not changed before or after Iran's election." She further indicated that there are no plans for diplomatic relations or meetings at the leadership level with Iran at present, suggesting no possibility of a summit between the two countries.

This statement is interpreted as a direct response to President-elect Raisi's earlier remarks denying any intention to meet with President Biden. At his first press conference after the election, Raisi said, "I have no intention to meet with President Biden," and provoked the U.S. side by stating, "Since the U.S. was the first to break the nuclear agreement, Iran does not trust the U.S., and trust will only be built if the U.S. lifts sanctions first."

Raisi's demand for the U.S. to lift sanctions first is analyzed as stemming from his own political burden, as he is listed on the U.S. sanctions list against Iran. According to CNN, Raisi was sanctioned by the U.S. for human rights abuses, including approving the execution of at least nine children as head of Iran's judiciary in 2019 and for the execution of more than 5,000 political prisoners in Iran since 1988.

[Image source=AP Yonhap News]

The Times of Israel reported, "The presidency of a president under U.S. sanctions against Iran will disappoint the Iranian people who had hoped for economic relief through the lifting of U.S. sanctions," adding, "Raisi, elected amid low voter turnout, may face significant burdens early in his administration."

International oil prices rose sharply. On the same day, West Texas Intermediate (WTI) crude oil on the New York Mercantile Exchange (NYMEX) rose 2.8% from the previous session to $73.66 per barrel. Brent crude on the London ICE Futures Exchange also closed up 1.89% at $74.90 per barrel.

The market's sensitivity is attributed to strong demand for Iranian oil from Asian countries, including China, where oil demand has recently surged. According to the Wall Street Journal (WSJ), Herman Wang, senior oil analyst at energy information firm Platts, stated in a report that "many countries in the Asia region want to resume purchasing Iranian oil, which is easy to refine, as soon as sanctions are lifted following the restoration of the Iran nuclear deal," and forecasted, "Given the strong recovery in oil demand in Asia, including China, the return of Iranian oil to the market will have a significant impact on international oil prices."

Some analysts predict that even if the Iran nuclear deal restoration negotiations are difficult but eventually concluded, smooth supply of Iranian oil within the year will be unlikely, so oil prices will continue to soar for some time. Ed Beal, head of commodity research at Emirates NBD, the Middle East's largest bank owned by the United Arab Emirates (UAE) government, told CNBC in an interview, "Even if Iran returns to the oil market, as a member of OPEC Plus (+), Iran will find it difficult to freely determine production levels," adding, "Considering the aging of Iran's nuclear facilities, Iranian oil is expected to be freely exportable only after next year, so it is unlikely to have a major immediate impact on the sharp rise in oil prices."