How could the result impact the nuclear agreement and sanctions?
As it currently stands, all candidates have vowed to continue abiding by the Joint Comprehensive Plan of Action (JCPOA), the nuclear deal signed in 2015 in which Iran agreed to rein in elements of its nuclear program in exchange for partial sanctions relief from the U.S. and the European Union (EU).
Yet, the candidates’ post-election commitment cannot be counted on, particularly if the country sees a win from hardliner Raisi, which would have significant implications for Iran’s relationship with the U.S., according to Richard Mallinson, geopolitical analyst at Energy Aspects.
“We already have a Trump administration taking a notably different tone than the Obama administration. It hasn’t yet torn up the Iran deal…but still we’ve got the sanctions under that deal being put under review by the State Department, we’ve got new sanctions being imposed for missile tests, we’ve got much tougher language coming out of the U.S.,” he explained on CNBC’s Squawk Box on Friday.
“If you then have a tougher voice in Tehran, I think that’s going to increase the pace at which tensions escalate,” he added.
Every 90 days, the U.S. president must certify for Congress that Iran is fully compliant with the JCPOA to ensure that the economic sanctions can continue to be waivered. Trump’s enthusiasm for the deal (the destruction of which he has previously described as his “number one priority”) could further diminish if the new Iranian leadership moves forward with a steelier stance.
Will the oil market move on the result?
Since the signing of the JCPOA, Iran has been able to more than double its supply of oil to the market so fears that the deal could be vulnerable post-election has some fearing for Iran’s ongoing ability to supply at this higher output level.
However, calls that a Raisi win will push the oil price (currently hovering around $50 per barrel) back towards $60 are ambitious, says Mallinson.
“I don’t think it does on its own. I think we’re heading in that direction with the OPEC deal and rebalancing more widely but in terms of Iran the question is now really can its exports grow from current levels, can they stay at current levels or do they actually fall back?” asked Mallinson.
“If the deal collapses they fall back – not all the way down to the 2012/2015 levels but they would have to come off a bit as some European buyers would get more nervous,” he asserted.