Source: RigData RADAR published September 1, 2016
Considering the Iran nuclear deal 1 year after it signed off on the Joint Comprehensive Plan of Action (JCPOA) with a group of five major powers led by the US (P5+1), how has it played out in practice? And what does it mean for the current and future state of oil markets?
Viewed by the Obama administration as a win for the US and the Middle East, the nuclear agreement between Iran and the major powers has considerably constrained Tehran’s capability to produce the fissile material necessary to build a nuclear bomb—at least for the near term.
The JCPOA remains controversial one year after its conclusion, and opponents who are unreconciled to the deal in both Iran and Washington continue efforts to derail it. However, criticism from these opponents has diminished because the JCPOA has delivered on its principal goal, which is hindering Iran’s ability to construct nuclear weapons for an extended period of time—for now at least. Additionally, the International Atomic Energy Agency (IAEA) found Iran in compliance in its two quarterly reports issued this year, which has not given opponents of the deal much ammunition.
A relative success?
An important truth about the JCPOA is that it was transactional and, as President Obama insisted, the agreement addressed one particular immediate problem: Limit Tehran’s nuclear capabilities now. In these narrow terms, the deal can be judged a relative success; however, the significance of that relative success should not be undervalued. The risks in the turbulent, sectarian Middle East would be greatly magnified in a terrible way with a nuclear-armed Iran. Looking at the agreement through a much broader lens, it can be viewed as a move toward Iranian-American rapprochement, as a boost to the cause of balance and democratization in Iran, and as a mechanism for addressing the vicious cycle of sectarian violence threatening to devour the region. In this light, the deal serves as a catalyst of improved cooperation from Iran on other priorities—Syria, Yemen, Iraq come to mind—or to jump-start progress in Iran domestically.
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