Trump Presidency May Jeopardize Iran’s New Oil Contracts

Just when western oil majors started resuming investments in Iran’s oil and gas after the lifting of the sanctions, the election victory of Donald Trump – who has spoken against the nuclear deal that led to lifting of said sanctions – may make international oil companies rethink their enthusiasm in bidding in Iran’s new oil and gas contract tenders.

Last month, Iran invited international E&P companies to start pre-qualifying for bidding under the new petroleum contract models approved in September.

But in March of this year, Trump said in a speech addressing the American Israel Public Affairs Committee:

“My number-one priority is to dismantle the disastrous deal with Iran.”

Even if Trump were to try to keep this ‘number-one’ priority, the Joint Comprehensive Plan of Action (JCPOA) is a deal between Iran and several world superpowers, including the U.S., but also the UK, China, France, Germany, and Russia—and dismantling it would require a force larger than Trump alone.

In a statement following Trump’s victory, Iran’s President Hassan Rouhani said, as quoted by state news agency IRNA:

“Iran exercised vigilance to settle the nuclear dispute and got approval of the UN Security Council revoking the sanctions, so that the US government cannot change the situation.”

Related: Post-Election Oil Prices: Can We Expect A Plunge?

Regardless of what Trump could or could not do, or try to do, analysts reckon that his coming to office alone might make international oil companies shy away from investing in Iran’s oil and gas field development. The Trump presidency may also put a kink in Iran’s plans as it attempts to ramp up its crude oil production to pre-sanction levels.

Last month, Ali Kardor, the managing director of the National Iranian Oil Company (NIOC), said that Iran’s production has successfully reached the 4-million-bpd mark. The Islamic Republic has been steadily increasing its crude oil output since the sanctions were lifted in January. Now Iran is pleading exemption from production cuts as part of a potential OPEC deal to limit output and has reportedly clashed with Saudi Arabia (again) regarding who of those two regional archrivals would blink first in sacrificing market share and output in a possible OPEC deal.

According to Seeking Alpha, Saudi Arabia might “leverage the uncertainty from the Trump victory to force Iran to agree to an OPEC deal”.

At any rate, Iran’s oil production, contracts and diplomacy will not be facing serene weeks, and possibly months, ahead.

By Tsvetana Paraskova for Oilprice.com

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