Cheap Oil Not Swaying Tehran Approach

Cheap Oil Not Swaying Tehran Approach  Cheap Oil Not Swaying Tehran Approach

The claim by opponents of nuclear talks, including Israeli Prime Minister Benjamin Netanyahu, that lower oil prices can sway Iran into making greater concessions on its nuclear program seems unrealistic, experts, diplomats and even Republican lawmakers told Reuters.

They noted that Iran has withstood extreme fluctuations in crude prices before and that sanctions have blunted the effect of oil on its economy. Others said Iran would likely view any further concessions as humiliating and would be prepared to forego a deal if the current talks collapsed.

Most doubted that oil alone would force Tehran into a significant shift in its bargaining position.

"I think it hurts their economy, there's no doubt about that. But I don't think it's decisive," Senator John McCain, a leading Republican voice on foreign policy issues, told Reuters on Wednesday.

In his speech to Congress on Tuesday, Netanyahu cited cheap oil as a prime reason why the United States and other powers could afford to hold off on signing a "bad" nuclear deal with Iran ahead of an end-March deadline for a framework agreement. The current embargoes have in some ways made Iran less vulnerable to lower oil prices because its crude revenues are largely tied up in accounts in purchasing countries.

"The short-term impact of oil prices on Iran may be blunted by sanctions that already restrict the government's access to oil revenue held outside of Iran," said Jen Psaki, the US State Department spokeswoman.

One expert noted that Iran over the past few decades has seen oil prices range from as high as $140 a barrel, to a low of $10.

"There's never been a strong correlation between (the approach adopted by Iran's leadership) and the price of oil," said Karim Sadjadpour, an Iran expert at the Carnegie Endowment for International Peace in Washington.

Others warned that the US might have trouble keeping the sanctions coalition together if talks break down, particularly if there is a perception that a hardline US position were to blame for their collapse. "It is not possible for the United States to keep this consensus against Iran with European countries and other countries for much longer," said Sara Vakhshouri, an energy consultant based in Washington.

"The sanctions and this consensus could erode after some time."

Republican Senator Mark Kirk, co-author of a bill that would impose stricter sanctions on Iran, said he had seen no indication that lower oil prices had changed Tehran's behavior, noting a recent military exercise carried out by Iranian forces near the Strait of Hormuz.

"They had enough money to build a replica of a US aircraft carrier and blow it to hell," Kirk told Reuters, saying that now was the time for more sanctions.