Iran nuclear talks: How will Islamic State's rise affect negotiations?

As negotiations between world powers and Iran on the Gulf nation's nuclear program approach a late November deadline, signals from the talks are all over the place: Progress is being made, the toughest outstanding issues haven’t advanced, a deal is still possible by the deadline, reaching a deal over the coming weeks is not realistic.

Secretary of State John Kerry had the nuclear issue high on his agenda when he met earlier this week with his Iranian, European Union, and Russian counterparts. Senior State Department officials said at the close of another round of talks in Vienna that while the six powers negotiating with Iran remain “focused on one thing … and that is having a full agreement done” by the Nov. 24 deadline, “substantial work” remains before that goal can be reached.

Such wording has varied little over the course of negotiations.

But two factors not directly related to the nuclear talks have surged onto the scene. The rapid rise over the summer of the Islamic State and in particular its expansion from Syria into Iraq, and falling crude oil prices and are influencing calculations by key governments involved in the talks, some regional analysts say.

And on the whole, they add, the rise of the Islamic State (IS), also known as ISIS or ISIL, and falling oil prices appear to be affecting those calculations in a way that bodes well for some kind of crisis-averting ending to the current negotiating round.

With a comprehensive deal by Nov. 24 looking increasingly remote, speculation is mounting that the parties will agree to extend talks again, perhaps for another six months (as they did in May). That would avert a breakdown in negotiations – while in turn avoiding a crisis with Iran – at a time when the region and much of the world are more focused on the threats posed by IS and Islamist militancy in general than on Iran’s nuclear program.

Before IS militants swept into Iraq from Syria in June, the United States and Iran were talking but were not on the same side on any major international issue – certainly not on Syria’s civil war. But the growing threat IS poses to Iraq, with the radical group now having Baghdad in its sights, has effectively made allies of Washington and Tehran in the effort to keep Iraq stable and out of IS hands.

A breakdown of the nuclear talks could potentially put Washington back on a war footing with Iran, but that’s a crisis the administration prefers to avoid. President Obama has consistently said that “all options remain on the table” to stop Iran from progressing further towards possession of a nuclear weapon. 

That’s always been true, but it is even more a reality now that Iran – although not a formal member of Obama’s international coalition to defeat IS – is effectively on the same side of the IS challenge in Iraq as the US.

Falling crude oil prices are considered a factor influencing the nuclear talks for one simple reason: impact on Iran’s economy. The per-barrel price fell below $90 this week, and is down by a quarter over the past six months.

Oil producer Iran is already struggling under onerous international economic sanctions, and is not seen as wanting to risk the additional economic blows that a breakdown in the talks would almost certainly entail at the same time that oil prices are so weak. Iranian President Hassan Rouhani has promised improving economic conditions to the Iranian people, but efforts to keep that promise would be set back by a breakdown in nuclear talks that led to additional rounds of sanctions.

Negotiators will continue to work for a comprehensive deal over the coming month, but many signs are pointing to some kind of second extension of the interim deal now in effect that basically freezes Iran’s nuclear program in exchange for a small amount of sanctions relief for Iran.

That outcome would allow the Iranian nuclear issue to remain on something of a back burner while the US focuses on the IS challenge, and Iran gets a better sense of where its economy is heading.