Iran's presidential election has been watched closely by traders and investors due to the strong relationship between new Iranian president and the future of nuclear deal and oil supply.
Incumbent Hassan Rouhani was a key architect of the 2015 nuclear deal with the US, the EU and other partners. The election is seen, at least in part, as a referendum on that agreement, which has so far yielded mixed economic results for Iranians.
For many in Iran, especially in affluent areas of the capital, Tehran, Rouhani has provided a glimpse of what many have long desired -- engagement with the outside world, without the types of banking and visa restrictions, as well as economic sanctions -- that left them feeling so isolated, according to CNN report on election's preliminary results.
The President has had a tough time defending the 2015 nuclear deal and his opponents have accused him of not making good on his promises. Debates have largely centered on this issue.
Rouhani billed the deal as one that would thrust open the gates of economic opportunity, bring the country out of its isolation and create millions of jobs for Iranians.
The agreement has brought a string of billion dollar deals with Western firms for airplanes and oil exploration in Iran.
But the benefits have been largely limited by a fall in global oil prices and US President Donald Trump's election, which introduced uncertainty for investors -- Trump has repeatedly threatened to rip up the deal.
The lifting of sanctions has been a boon for Iran, who ramped up oil production from 2.8 million barrels per day in 2015 to 3.76 mb/d as of April 2017. But the low-hanging fruit for Iran has largely been plucked. Going forward, more production gains will likely need to come from new projects and new investment, probably requiring the help of international oil companies. Iran hopes to ramp up production to 5 mb/d by 2021.
U.S. oil companies like Exxon and Chevron are still barred from Iran because of lingering sanctions from the U.S. Treasury Department. But other majors such as Royal Dutch Shell and French oil giant Total inked some preliminary agreements with Iran at the end of 2016. Shell is looking at evaluating oil fields along Iran’s border with Iraq while Total has a non-binding agreement to develop a natural gas field.
As financial Times has reported recently, the foreign companies’ desire to get involved in Iran is very high. By reassuring the existing nuclear deal, sanctions will be relaxed, investment will flow into Iran very quickly, funding new developments and production, some of which could be brought on stream very quickly.
Based on CNN report on Iran Election