Moscow has recently indicated that it will only commit to freezing its oil output at current levels, rather than reducing it to meet the overall levels established by Saudi Arabia and its OPEC partners. This position directly parallels that which had been advanced by Iran since the start of the collective negotiations last spring. Iranian officials maintain that they must be allowed to reclaim market share that was lost while the nation remained under strict, US-led sanctions. Therefore, it has insisted upon exemption from the collective cuts, alongside Libya and Nigeria, whose outputs have been affected by internal crises. 

Economic Policy Journal reported on Tuesday that Iranian Oil Minister Bijan Zanganeh had once again reiterated his country’s unwillingness to cut its production, thus dashing hopes that the Iranian position may have softened in light of recent increases in its contacts with foreign markets. Iran initially set an output goal of four million barrels per day before it would contemplate participation in the OPEC cuts. Iran identified this as its pre-sanctions output, but this figure has been disputed as an overestimate. Yet in certain public communications, Iranian officials have set their benchmark even higher. 

In any event, the Islamic Republic’s increases in oil output have either stalled in recent weeks or have ceased to be reported accurately. After an initial increase that defied the expectations of global analysts, those levels have consistently failed to crest over the four million barrel figure, with the most recent Iranian estimate placing them within just 80,000 barrels of that goal. Forbes pointed to this figure on Tuesday and said that it likely would still be considered a small enough output to justify the continued Iranian intransigence over the OPEC deal. 

But not only that, Reuters indicates that the Iranians have gone beyond excluding themselves from the terms of that deal. Tehran has reportedly written to OPEC to insist that Saudi Arabia must cut its oil output by 1.5 million barrels per day, to 9.5 million, not by the 0.5 million barrels originally proposed. This would reduce Saudi output back down to the levels that it had maintained prior to the imposition of economic sanctions on Iran, thereby counteracting what Iran sees as a Saudi advantage in market share gained during that period. 

It is extremely unlikely that the Saudis would concede to this, especially in absence of an Iranian commitment to its own output limits, since this would provide Iran with an opportunity to snatch up market share abandoned by its OPEC partners over the coming months. 

In this context, it would appear that good news for the Saudis is difficult to come by. However, the AP pointed out that Iraq – another close ally of the Islamic Republic– has contradicted the Iranian-Russian intransigence, with Prime Minister Haider al-Abadi stating that his country is ready to make substantial cuts in line with the OPEC plan.

There is also the potential for good news in that a wide range of global buyers and investors may prove newly reticent to do business with Iran in light of the recent election of Donald Trump as president of the United States. There has been much speculation about what steps Trump may take to change the US relationship with Iran, and although the details remain very unclear there is no doubt that his administration will take a much more hardline stance than that of his predecessor. 

For the time being, Zanganeh, the Iranian oil minister, insists that Trump’s election has had no noticeably negative effect on Iran’s dealing with foreign businesses, including those based in Europe. Forbes reports that some Western experts generally agree with this assessment, pointing to prospective collaboration between Iran and certain Western companies as evidence that Europe remains committed to taking advantage of the Joint Comprehensive Plan of Action spearheaded by President Obama. 

Forbes points out that plans are underway for the French oil company Total SA to help Iran with the development of the South Pars oil field. And on Monday, UPI detailed a new memorandum of understanding signed between the National Iranian Oil Company and Germany’s Schlumberger concerning the exploration of three other oil fields. 

However, it is easy to imagine these preliminary moves being undermined in January when Mr. Trump actually takes office and possibly beings foreign policy initiatives including expanded sanctions on Iran. It has been widely noted that such a program could compel the Iranians to cancel the nuclear agreement on their own side. However, Breitbart quoted an Iran expert from the Foundation for the Defense of Democracies as saying that Supreme Leader Ali Khamenei’s threats over that prospective situation are “akin to blackmail” of both the outgoing and the incoming US administrations. 

The expert, Behnam Ben Taleblu, went on to recommend that Trump avoid direct threats to the Joint Comprehensive Plan of Action, and instead simply enforce it more stringently while also demanding improved transparency from inspectors with the International Atomic Energy Agency. This may well be the approach that Trump takes, as he has stepped back from promises to “tear up” the JCPOA since his election. And this may also be sufficient to undermine or substantively alter the deal without letting his administration take the blame for it, especially if the mere implication of a more hardline US foreign policy affects the trajectory of Iran’s economic policy. 

The Forbes report pointed out that Iran is already engaged in a serious debate over its dealings with foreign companies. The country’s contracts have always been highly restrictive of foreign ownership or Iranian assets and of foreign profits derived from them. There has been some efforts to diminish these restrictions in the aftermath of the JCPOA, but Iranian hardliners have strongly pushed back against them. The initiation of new US policy under Trump may further bolster those efforts, but this may ultimately be beneficial to the Trump administration and to Iran’s Saudi adversaries, provided that it leads to smaller amounts of European investment and thus to Iran wielding less economic leverage. 

As to whether Trump will take the anticipated hardline approach, it is possible that Iran’s hardliners will leave him with little choice by the time he takes office. Driven by the Iranian Revolutionary Guard Corps, provocations against US aircraft and naval vessels have increased since the conclusion of nuclear negotiations. In the latest example of this, one Iranian ship in the Strait of Hormuz aimed a weapon at a passing US Navy helicopter. American defense officials declared, “The behavior by our standards is provocative and could be seen as an escalation.”  

On the other hand, the International Business Times report on this incident notes that there have been indications that Iranian officials are seriously discussing a draw-down of their nuclear stockpiles, in order to present a more compliant image in advance of Trump’s taking office. Iranian Foreign Ministry spokesperson Bahram Qasemi has, however, denied this. It remains to be seen whether Iran will moderate or intensify its behavior toward Western adversaries in the months ahead. But its willingness or unwillingness to cooperate with Arab adversaries in the coming days may be a partial indicator of what to expect.