Iran’s resurgent oil industry has confounded sceptics. Production is up by almost a third since sanctions were eased in January and foreign companies are lining up to help boost output further. Yet Donald Trump’s victory in the US casts doubt on whether the momentum can last.
“The risk is heightened for future projects,” said Robin Mills, who founded Dubai-based consultants Qamar Energy and worked for Royal Dutch Shell in Iran. “It’s gotten more complicated.”
The US president-elect has vowed to tear apart the international nuclear deal with Iran that unlocked the country’s oil exports this year. Such a move could obstruct its plans to pump a further 800,000 bpd with $100bn of foreign investment. The oil market has been counting on Iran as a key new source of supply, and the current uncertainty may see investors step back.
“International oil companies are likely to adopt a wait-and-see position on Iran until it becomes clear what Trump does,” said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University and a former official in the Obama administration.
No one knows exactly how Trump’s bombastic rhetoric will transform into government policy. Since his surprise election, the billionaire real-estate developer has toned down some of his most contentious campaign promises, including building a wall along the Mexican border and prosecuting presidential rival Hillary Clinton.
Oil companies will take more time to see what direction Trump takes, according to three executives with knowledge of the situation, who asked not to be identified as their deliberations aren’t public. Even before Trump’s win, progress on Iran’s new oil-contract terms had been slow, and producers are still awaiting full details of the tendering process for fields, the officials said.
Iran’s re-emergence into the global economy goes beyond oil. Jetliner maker Boeing Co this year won a licence to sell planes to Tehran for the first time since 1977. The government also has urged European banks to return to the country. Following last year’s agreement with world powers, Iran has held up its side of the bargain by limiting nuclear development, the International Atomic Energy Agency said last week. Regardless, Trump has said his “No 1 priority is to dismantle the disastrous deal with Iran” that President Barack Obama implemented along with the leaders of China, France, Russia, the UK and Germany.
“Trump will be more negative on Iran and more aggressive toward the country,” said Olivier Jakob, managing director of Zug, Switzerland-based Petromatrix.
Iranian President Hassan Rouhani has said Trump won’t be able to undo the international deal on his own. Even if the US reimposes sanctions, countries in Europe are unlikely to support renewed curbs.