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Iran Expects Flood of Oil Investment, but Reality is Uncertain


Iranian Oil Minister Bijan Zanganeh expressed similar optimism, declaring that the nuclear agreement could once again make Iran one of the leading members of the Organization of Petroleum Exporting Countries.

But Zanganeh had previously struck a more downbeat note, describing the current state of the Iranian oil industry as catastrophic. The reality of the situation may make foreign investors more cautious about investing in Iran than Sheri-Moqaddam suggests, both because the petroleum and petrochemical industries have a long way to go and because the removal of sanctions on the Islamic Republic may not be a foregone conclusion, depending on the details of a final agreement and whether or not it is signed.

Nikkei indicates that US and EU entities are in fact setting the stage for greater investment in Iran, but it also points out that global oil prices have slipped amidst expectations that a nuclear agreement would be concluded quickly, bringing large-scale sanctions relief to Iran. The rapid opening of the Iranian oil market would flood an industry that is already saturated with petroleum, some of it from US sources. If OPEC continues to resist supply cuts as it has done in recent weeks, ostensibly in order to put pressure on Iran, a boost in legal exports may not be immediately feasible or seriously beneficial to the Iranian economy.

Some financial analysts project that even if Iran is offered immediate sanctions relief, the real effect of that relief will take years to register. If these projections are correct, recent Iranian confidence is certainly overblown and may reflect dramatically inflated expectations about the size of forthcoming Western investment.


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