DUBAI, May 5 (Reuters) – Emboldened by soaring oil prices since Russia invaded Ukraine, Iran’s clerical leaders are in no rush to revive a 2015 nuclear pact with world powers to ease sanctions against its energy-dependent economy, said three officials familiar with Tehran. thought said.

Last year, the Islamic Republic engaged in indirect talks with the United States to roll back U.S. sanctions that have sapped revenue and dramatically worsened economic hardship for ordinary citizens, sparking discontent.

But the talks have been on hold since March, mainly due to Iran’s insistence that Washington remove the Islamic Revolutionary Guard Corps (IRGC), Tehran’s elite security force, from the list of organizations US Foreign Terrorists (FTOs).

While the ultimate goal is still to resurrect the deal and therefore lift the sanctions, Iranian officials have said soaring oil prices have opened a window of opportunity for Iran by boosting revenue, giving the economy for months of respite.

“Our nuclear program is progressing as planned and time is on our side,” said a senior Iranian official, who requested anonymity because he was not authorized to discuss sensitive political issues with the media.

“If the talks fail, it won’t be the end of the world,” the official said, adding that the fact that Iran’s economy was no longer so dependent on a relaunch of the deal would provide powerful leverage to its negotiators if or when the talks resumed. .

Iran’s Foreign Ministry, which is handling the nuclear talks, did not immediately respond to requests for comment.

Iran’s finances came under intense pressure in 2018 when then-US President Donald Trump abandoned the nuclear pact between Iran and world powers – endorsed by his predecessor Barack Obama – and reimposed sanctions that have sharply reduced the oil revenues that fund a sprawling Iranian state apparatus.

Oil exports from Iran, which has the world’s fourth-largest crude reserves, have fallen from a peak of 2.8 million barrels per day in 2018 to a low of 200,000 bpd.

Tehran retaliated a year later by gradually violating the agreement’s nuclear restrictions, replenishing stockpiles of enriched uranium, refining it to higher fissile purity and installing advanced centrifuges to speed up production – thereby reducing the time it would take to develop a nuclear bomb, if that were the case. selected. Tehran claims to seek only peaceful nuclear energy.

Although Iran does not release exact figures on oil sales, an Iranian oil official said they are currently around 1.5 million bpd, with most going to China at a steep discount that Iranian authorities have refused to reveal.

Global crude prices remain high, however, with Brent hitting $139 a barrel in March, its highest since 2008 after Russia’s invasion of Ukraine exacerbated supply issues.

Iran’s parliament raised the cap on oil and condensate exports from 1.2 million bpd at a price of $60 last year to 1.4 million bpd based on the government’s budget of $70 a barrel. state, Iranian media reported in March.

REVENUE HIKE

Tehran’s refusal to back down on the FTO award request has raised doubts about the possibility of resolving the nuclear impasse. President Joe Biden’s administration has made it clear that it has no such plans, while not ruling it out either.

Iranian authorities have publicly ignored US pressure, saying Tehran has become adept at circumventing sanctions because they have been a reality for decades.

Jihad Azour, director of the International Monetary Fund’s (IMF) Middle East and Central Asia department, said Iran’s economy had adjusted to sanctions over the past few years.

“And the increase in oil prices and an increase in oil production (from Iran) is a further increase, I would say, in revenue,” Azour told Reuters.

However, Henry Rome, an Iran analyst at consultancy group Eurasia, said the Islamic Republic is underestimating the value of easing sanctions and overestimating its ability to fend for itself in the longer term.

“Iranian leaders likely view better domestic economic performance, limited enforcement of oil sanctions by the United States, and broader Western distraction given the war in Ukraine as reasons not to seek desperately to strike a deal. deal,” Rome said.

“Although they probably remain open to a deal at the right price.”

Despite the recent rise in income, sanctions continue to have a major impact on everyday life in Iran, meaning everyone from the business elite to low-income families is facing runaway inflation, to a falling currency and rising unemployment.

Clerical leaders may therefore be wary of the disenchantment simmering at home, according to a former Iranian government official.

Ultimately, they prefer an end to sanctions, fearing a return to unrest among low-income Iranians whose periodic protests in recent years have reminded leaders how vulnerable they can be to popular anger over economic hardship.

Not enough people are still feeling the benefits of rising oil revenues, the former government official added.

Iran analyst Saeed Leylaz said Iran’s internal economic problems, including mismanagement and corruption that deplete revenue needed for investment, job creation and development, pose a greater challenge. to the establishment than sanctions.

The official inflation rate is around 40% while some estimate it at over 50%. Nearly half of Iran’s 82 million people now live below the poverty line. Unofficial estimates suggest that unemployment is well above the official rate of 11%.

“All economic indicators point to worsening economic realities in Iran. To say that Iran is sitting on a powder keg is no exaggeration,” said Alex Vatanka, Iran program director at the Middle East Institute.

The prices of staples like bread, meat and rice are rising every day. Iranian media frequently report dismissals and strikes of workers who have not been paid for months, including in government-owned factories.

Owning a home in Tehran is impossible for many. Prices have increased in recent months by around 50% in some areas. The currency has fallen more than 70% against the US dollar since 2018.

“Where is this oil revenue going? Why don’t we feel any improvement?” said Professor Mohsen Sedighi, a father of two in Tehran.

Written by Parisa Hafezi; Editing by Mike Collett-White and Mark Heinrich

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