Investors eye rewards and risks in post-sanctions Iran

“Our priority is to develop our oil and gas fields using domestic and foreign potential”, Iranian Oil Minister Bijan Zanganeh said.

This article examines a “slice” of these implications to see how India’s energy security would be influenced by the Iran nuclear deal. “Some banks that can operate lawfully beyond the reach of the OFAC sanctions have chosen as a matter of bank policy not to engage in any Iran dealings…”

Also, as part of the Caspian cooperation, projects such as the North-South worldwide transport corridor will be implemented quickly and significant progress will be made in the format of trade and economic cooperation within the framework of the so-called Iran-Azerbaijan format, he added. Finally, the United States in concluding the deal has not foregone any of options it now holds to move against Iran.

Prior to the sanctions, Britain was a major trading partner with Iran.

“Deutsche Bank will continue to adhere to all US and European Union sanctions against Iran”, it said in a statement. The aim is to have this done by the end of this year. This is, by some estimates, the highest rate of “brain drain” in the world.

French firms, particularly in the auto industry, are already well established in Iran, although they have been affected by the worldwide sanctions imposed since 2006. But there is one area where even Israel may benefit from the deal: the price of oil. Even under sanctions, Iran continued to fund Hezbollah operations in the region, which analysts believe cost Tehran between $60 million and $200 million a year.

The oil market had risen Tuesday as investors were confident it would take time for Iran to start exporting more crude to a market awash with supplies. It is assessed that the Iranian crude oil inflow coupled with USA shale oil will at the least stabilise crude oil prices around the current levels if not depress them further.

That signalled strengthening demand in the world’s biggest consumer of oil. The subdued crude oil prices have afforded the 2015-16 budget an estimated subsidy bill at Rs.2.43 trillion, around 9% less than the revised estimate of Rs.2.66 trillion for 2014-15. Banks, airlines, construction companies and other entities and individuals that have been sanctioned for supporting terrorism or human rights abuses will remain on blacklists.

Going by a recent report from Fitch, Iran has close to 34 trillion cubic meters of natural gas reserves, which is around 18 percent of the total global natural gas reserves.

“Oil’s failure to respond positively to the (US) stocks data suggests that the prospect of additional oil supply from Iran is still weighing on the sentiment”, said analyst Fawad Razaqzada at trading site Forex.com. The facilities at Mangaluru, Visakhapatnam and Padur together offer just 11 days’ capacity. The country has also agreed to invasive inspections by the worldwide Atomic Energy Agency (IAEA). Moreover, although Iran has around 20 million barrels of oil in storage, some of it is needed for operational reasons domestically and is therefore, not destined for export.

Critics of the deal insist that more money for Iran means more problems for the Middle East. Sunni Saudi Arabia and Shia Iran are already fighting via proxies in Iraq, Syria, and Yemen, but Iranian and Saudi military spending have not been comparable.

London listed oil major Shell said this week it was interested in doing business in Iran, one of the world’s top oil producers.

But there are significant exceptions to Iran’s reopening.