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Implications of historic Iran deal

|By TAP Staff| The end of sanctions could bring a rapid economic boom Iran, which had its oil exports halved by sanctions, and its economy cut by about 20 percent. The prospect of a deal has already helped push down global oil prices because of the possibility that Iranian supply could return to the market.

Oil prices tumbled more than a dollar on Tuesday after the deal was reached.

“Even with an historic deal, oil from Iran will take time to return, and will not be before next year, most likely the second half of 2016,” Amrita Sen, chief oil analyst at London-based consultancy Energy Aspects, told Reuters. “But given how oversupplied the market is with Saudi output at record highs, the mere prospect of new oil will be bearish for sentiment.”

An economy bigger than Thailand’s and oil reserves rivaling those of Canada make Iran the most important market still closed to major equity investors, according to investment bank Renaissance Capital.

Removing the restrictions could open the Islamic Republic’s stock market to investors in early 2016, Renaissance’s Charles Robertson and Daniel Salter wrote in a report on Monday. Inflows could total $1 billion in the first year, they said.

“We are confident that Iran opening up will be one of the most interesting and positive developments for the emerging and frontier market asset class in many years,” Robertson and Salter wrote. “Iran is the largest and most important economy in our view that is still closed to institutional investors.”

The accord promises to end a 12-year standoff between Iran and world powers, which led to sanctions that crippled the nation’s economy. While the impact of an accord won’t be immediate, growth is set to accelerate from 2016, with gross domestic product expanding 7.9 percent, Emirates NBD PJSC, Dubai’s biggest bank, said in a report on Monday. Iranian stocks, which rose to the highest in three months this week, declined 0.1 percent at 11:27 a.m. in Teheran