Home' Trinidad and Tobago Guardian : July 16th 2015 Contents JULY 16 • 2015 www.guardian.co.tt BUSINESS GUARDIAN
ENERGY | BG9
Here s what you need to know about the Iran
What just happened and why is this
such a big deal?
In general, Iran has agreed to limit its nuclear
programme if the US and other world powers
ease up on what have been brutal economic
sanctions against the country.
The 100-page deal caps off more than a decade
of diplomatic wrangling aimed at keeping Iran
from building a nuclear bomb. US and Israeli
officials say a nuclear-armed Iran would be a
security disaster and potentially lead to war
because of Tehran's support for anti-Israel militant
groups, such as the Palestinian Hamas and the
Lebanese Hezbollah group, and frequent refer-
ences by Iranian leaders to Israel's destruction.
Iran has long maintained that its nuclear pro-
gram is peaceful and that it never sought to
build a bomb. The talks were mostly considered
stalemated until summer 2013, when Iran elected
a new president, Hassan Rouhani, who said the
country was ready to strike a deal.
The final agreement with Iran was negotiated
by US, Britain, Germany, France, China and
So what is the agreement?
Iran agreed to reduce the number of urani-
um-enriching centrifuges it has in stock, as well
as its stockpile of enriched uranium. It also has
agreed to convert an enrichment site called
Fordo---dug deep into a mountainside and
thought impervious to air attack---into a research
Another key piece is the possibility of inspec-
tions: if the UN nuclear agency identifies a sus-
picious site, it can ask to inspect it. And if Iran
refuses, an arbitration panel will decide whether
the Iranians have to open up the site to inspection
within 24 days. All of this is aimed at slowing
down the rate at which Iran could, in theory,
build a nuclear weapon.
In exchange, Iran stands to receive more than
US$100 billion in assets overseas that had been
frozen by other countries. It also will see an end
to a European oil embargo and other financial
restrictions on its banks. If Iran reneges on its
promises, the sanctions will snap back into place.
Every good deal involves compromise.
What did the West give up?
Among the biggest concession by the West is
that Iran doesn't have to submit to international
inspections anytime, anywhere. Because the
process for inspections could end up with an
arbitration panel, access to the Islamic Republic's
most sensitive sites isn't guaranteed and may be
And while Iran has to reduce its stockpile of
enriched uranium and its number of centrifuges,
it doesn't have to give them up entirely. It also
isn't being forced to close its mountainside Fordo
facility, just use it for research purposes.
Another concern is that a UN weapons
embargo could lift in five years or sooner if
certain criteria are met. US officials had sought
to maintain the weapons ban because they
worry that once sanctions are lifted and Iran's
government becomes flush with cash again,
more military aid would find its way to places
like Syria and Yemen. But Iran dug in and was
supported by Russia and China, which stand
to profit from greater weapons exports.
What does all this mean for oil
Any easing of economic sanctions will likely
mean that Iran can sell more oil which, in turn,
could bring down crude oil prices. In trading
Tuesday, benchmark US crude oil prices were
What does Israel say? Don't they have
the most to gain or lose with this?
Yes, they do, and Israel isn't happy because
the deal basically leaves Iran's nuclear infra-
structure in place. Israeli Prime Minister Ben-
jamin Netanyahu called the agreement a "bad
mistake of historic proportion."
President Barack Obama says he sees it dif-
ferently: If a diplomatic agreement with Iran
can't be found, that puts the next US and Israeli
leaders in the position of having to contemplate
military action to prevent Iran from building
What happens next? Can the US
Congress kill the deal?
Congress has 60 days to review the deal. A
vote of disapproval by itself won't stop the
agreement. But if Congress decides to impose
new sanctions on Iran or prevent the president
from suspending existing ones, that would
make it hard for Obama to fulfill the American
side of the deal. To do that, however, Senate
and House Republican leaders would have to
find enough support to override a presidential
ANNE FLAHERTY, Associated Press
4 key questions
about Iran's influence
on global oil prices
1. Will the agreement with Iran
affect global oil prices?
The easy answer is yes. The more difficult
response involves pinpointing when and
by how much.
Iran has by many estimates 10s of mil-
lions of barrels of oil waiting in inventory
to be sold. They will hit a market already
dealing with a glut of oil and relatively low
prices. Then the country will start increasing
production, which could eventually add
another 600,000 barrels of oil a day or
more, but that production increase is
expected to happen gradually.
2. When might we start seeing an
The timing depends on factors like when
sanctions against the country are lifted,
how Congress views the agreement, and
how quickly Iran can increase production.
Several analysts say they don't believe
Iranian oil will have much of an influence
on prices until 2016, when that stored oil
is expected to start hitting the market.
Others say the prospect of a deal, in the
works for months, has already been factored
3. What other variables can
influence the cost of oil?
Key oil producers like Saudi Arabia could
lower production to help stabilise or firm
up oil prices, but they might lose market
share in the process.
Prices may fall low enough to cause US
producers to scale back production some
more because oil would become too expen-
sive to produce.
Demand also influences prices, and that
can depend on the health of global
4. Will it affect what I pay for
That's hard to say. Gas prices often vary
widely from the direction of crude oil prices
and can depend on dozens of other factors
like where the fuel comes from and the
time of year.
Q&A on the Iranian
Iran's President Hassan
Rouhani addresses the
nation in a televised
speech after a nuclear
announced in Vienna, in
Tehran, Iran, Tuesday,
July 14, 2015. After long,
world powers and Iran
struck a historic deal
Tuesday to curb Iran's
nuclear programme in
exchange for billions of
dollars in relief from
an agreement aimed at
averting the threat of a
nuclear-armed Iran and
another US military
intervention in the
Middle East. (AP)
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