US-Iran Relations Are Thawing. It Could Lower Oil Prices.

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Iran now exports at least 1.5 million barrels of oil a day, more than three times as much as it did in 2019. Five Americans kept in Iranian jails were released and flown to Qatar on Monday, and the U.S. agreed to free Iranian prisoners held in American jails. In addition, the U.S.

agreed to allow $6 billion in Iranian oil money to be released from banks that had frozen those funds.

The deal comes at a complicated moment in the relationship between the countries. Iran’s clout in the oil industry—it has the third-highest reserves in the world after Venezuela and Saudi Arabia—has given it leverage at a time when international oil prices are over $90 per barrel.

READ MORE Iran still faces U.S. sanctions because of its nuclear enrichment program, but the country’s oil exports have still been on the upswing over the past year or so. Analysts say the U.S. hasn’t been enforcing the sanctions aggressively, because the Biden administration wants to increase global oil supplies—which has a deflationary effect on oil prices.

The U.S. government appears to be practicing “de minimis sanctions enforcement to enable Iranian barrels to reach the Asian market,” wrote RBC Capital Markets analyst Helima Croft.

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