World powers adjourned talks in Vienna with plans to return next week, as differences between Iran and the U.S. over how to revive a landmark nuclear deal continue to delay the Islamic Republic’s return to oil markets. Both the U.S. and Iran will need to make “hard decisions” that could ruffle domestic political constituencies, Enrique Mora, the European Union’s deputy foreign policy chief, said after Wednesday’s talks concluded. Envoys were departing Vienna to return to their capitals, where leaders will have to decide whether the landmark agreement capping Iran’s nuclear work in exchange for sanctions relief is worth reviving.
Iran is investigating a fire that sank one of its largest navy ships early Wednesday in the Gulf of Oman, according to Iranian state media, the latest blow to the country’s vital infrastructure and military assets. Hours after the ship fire, a large fire broke out at an oil refinery near the Iranian capital. Leakage in a liquefied petroleum gas pipeline at the facility caused an explosion and fire, the head of Tehran’s crisis management team told state television. He said that no one had been harmed.
The likely return of Iranian oil is setting up what promises to be an aggressive battle to supply a corner of the coveted Asian market. Iran is a major producer of condensates -- ultra-light oil that’s a by-product from natural gas fields -- and South Korea is Asia’s biggest operator of splitters designed to turn it into petrochemicals used to make plastics SK Innovation Co., Hanwha Total Petrochemical Co. and Hyundai Oilbank Co. used to favor Iran’s South Pars condensate due to plentiful supply and relatively low prices, but U.S. sanctions saw those flows dry up from 2019.
NUCLEAR DEAL & NUCLEAR PROGRAM
European diplomats say the latest round of talks over Iran’s nuclear program has made progress, expressing hope that agreement could soon be reached for Tehran to comply with a 2015 deal aimed at curbing its atomic ambitions and also see the United States rejoin the accord. Enrique Mora, the European Union official who chaired Wednesday’s talks in Vienna, said delegations from Russia, China, Germany, France, Britain, Iran and the U.S. would return home to brief their governments and then meet again in the Austrian capital next week.
SANCTIONS, BUSINESS RISKS, & OTHER ECONOMIC NEWS
Oil futures extended their rise on Wednesday to their highest finish in over two years, buoyed by optimism over the outlook for global demand as events in Iran raised risks to supply stability in the region. Reports of a massive fire at a state-owned oil refinery near Tehran followed news that the largest warship in Iran’s navy caught fire and sank on Wednesday. The events are “raising the overall risk premium in the Middle East,” Phil Flynn, senior market analyst at The Price Futures Group, told MarketWatch.
U.S.-IRAN RELATIONS & NEGOTIATIONS
Defense Secretary Lloyd Austin will meet with his Israeli counterpart Benny Gantz on Thursday to discuss both restocking the Iron Dome and security issues posed by Iran. Gantz will also be meeting with Secretary of State Antony Blinken and national security adviser Jake Sullivan, Gantz’s office announced, and meetings will include talks about the U.S. potentially rejoining the 2015 Iran nuclear deal as well as how to maintain Israel’s military superiority in the region.
Less than two weeks away from the upcoming presidential election, Iranian President Hassan Rouhani said the problems with the United States regarding the nuclear negotiations being held in Vienna have mostly been resolved. Negotiators from Iran, the United States and other members of the UN Security Council are trying to get the United States back into the nuclear deal known as the Joint Comprehensive Plan of Action (JCPOA), which former President Donald Trump exited in 2018.
MILITARY/INTELLIGENCE MATTERS & PROXY WARS
Does Iran already have nuclear weapons and the capability to make an electromagnetic pulse attack that would destroy electric grids and critical infrastructures sustaining the lives of 330 million Americans? Not everyone agrees with Washington's intelligence community "consensus" that Iran does not yet have nuclear missiles.
IRANIAN INTERNAL DEVELOPMENTS
A massive fire broke out Wednesday night at the oil refinery serving Iran’s capital, sending thick plumes of black smoke over Tehran. It wasn’t immediately clear if there were injuries. The fire struck the state-owned Tondgooyan Petrochemical Co. to the south of Tehran, said Mansour Darajati, the director-general of the capital’s crisis management team. Firefighters believe it struck a pipeline for liquefied petroleum gas at the facility, Darajati told Iranian state television. He did not elaborate.
A third of eligible Iranians have no intention of voting in the country’s June 18 presidential election, according to one poll, suggesting a record low turnout. About 32% of 5,159 people surveyed by the semi-official Iranian Students Polling Agency between May 30 and June 1 said they won’t vote “under any circumstances,” compared to 34% who said they’d definitely take part. The election, which will end the two-term rule of President Hassan Rouhani, a cleric who supports ties with the West and greater openness at home, has been hit by boycott calls after a top constitutional body disqualified scores of prospective candidates -- including high-profile reformist and conservative politicians.
RUSSIA, SYRIA, ISRAEL, HEZBOLLAH, LEBANON & IRAN
Iran is interested in purchasing a range of Russian weapons systems, the head of Russia’s Federal Service for Military and Technical Cooperation, Dmitry Shugayev, revealed Tuesday. On the sidelines of a congress of the Union of Machine Builders, Shugayev said, “We have long-standing relations with Iran. We are implementing contractual commitments, which we assumed for deliveries,“ state-owned TASS reported. “There are prospects [of bilateral military and technical cooperation]. Tehran is interested in various types [of armaments].”
The Iranian regime has reportedly begun to restock its Islamist proxy in the Gaza Strip - Hamas, which entirely controls the enclave - with the resources to produce thousands of new rockets, according to a report on Tehran state TV. In the recent 11-day conflict, which ended last month and for which a fragile Egyptian-brokered ceasefire still holds, Hamas and Palestinian Islamic Jihad fired more than 4,300 rockets toward Israel's population centers. For nearly two weeks, Israel's citizens were forced to sporadically seek refuge in bomb shelters as terrorists fired rockets indiscriminately.
GULF STATES, YEMEN, & IRAN
Remarks by Iran’s so-called “ambassador” to Yemen, Hassan Eyrlou, have sparked widespread public anger in the battle-weary nation. Politicians and Yemenis alike were enraged by Eyrlou’s blatant rejection of a Saudi peace initiative and call for rebooting negotiations. The official’s statement preceded an anticipated speech by leader of the Iran-backed Houthi militias Abdul Malik al-Houthi during which he is expected to respond to the Saudi initiative.
OTHER FOREIGN AFFAIRS
Iran and the Central African Republic are in arrears on paying their dues to the United Nations’ operating budget and will lose their voting rights in the 193-member General Assembly, the U.N. chief said in a letter circulated Wednesday. In the letter to General Assembly President Volkan Bozkir, Secretary-General Antonio Guterres said three other African countries -- Comoros, Sao Tome and Principe, and Somalia -- are also in arrears. But he said the assembly passed a resolution saying they can still vote in the current session which ends in September.