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 Officials involved in ongoing negotiations said on Sunday they were
close to a deal that would bring sanctions relief in exchange for
curbs to Tehran's atomic program, although no agreement was expected
before Monday.
Analysts have focused largely on oil in determining the impact on
international commodities markets if sanctions are lifted. The
timing of any lifting of the measures that have cut Iran's crude
exports as well as a United Nations Security Council arms embargo
and ban on its ballistic missile program have been among the major
sticking points on reaching a deal.
But even with a diplomatic agreement this week it would take time
for Iran to start exporting large amounts of crude again as the
sanctions on exports would first need to be formally lifted and
Iran's crumbling oil infrastructure modernized.
"They can add about 200,000 bpd, which is not a significant volume,"
said Nick Sharma, managing director at research & consulting firm
IHS, estimating that it would take at least 18 months for Iran to
add another million bpd to exports.
Japan's government-affiliated Institute of Energy Economics said
that if there was a deal Iran's oil output might rise by
700,000-800,000 barrels bpd by the second half of 2016.
Iran, a member of the Organization of the Petroleum Exporting
Countries (OPEC) has some of the world's biggest oil reserves. It
exported almost 3 million barrels per day (bpd) of crude at its
peak, before Western sanctions over its alleged ambitions to build a
nuclear bomb saw shipments collapse to about a million bpd over the
last 2-1/2 years.
A modest increase in available supplies would still add to an
estimated 2.6 million barrels of crude being produced each day in
excess of daily global demand, threatening to overwhelm on and
off-shore storage capacities.
Analysts say a further swell in spot supplies will drag prices back
to or below levels seen during the peak of the global financial
crisis of 2008/2009.
IRAN NEEDS CEMENT, STEEL AND FOOD
While Iran's oil potential is already largely priced into the
market, analysts say other sectors such as cement, steel and
agriculture commodities would also be affected.
"After years of neglect, should sanctions fall away, then their oil
exports will be able to fund an infrastructure development plan that
will need steel, power and cement,” said Ian Claxton, managing
director of Thai ship owner Thoresen Shipping.
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"They currently don't have cement manufacturing capabilities so ...
bagged or bulk cement combined with increased steel for construction
could well be the commodities most affected for bulk shipments with
India, Middle East and China as origins," he added.
Claxton said that Iran would also need to import more agricultural
products like rice, wheat, corn and soy meal.
"The need for bulk wheat, corn and rice will increase as local GDP
and disposable income increases, again from Thailand, India, the
U.S.A. - if all is forgiven - and South America plus the Black Sea,"
he said.
Iran also used to be a significant supplier of iron ore to China,
although analysts say that due to global oversupply and record low
prices that Iran IS unlikely to pursue a large-scale resumption in
this sector.
Western powers have long suspected Iran of aiming to build nuclear
weapons and using its civilian atomic energy program to cloak its
intention - an accusation Iran strongly denies.
(Reporting by Keith Wallis in SINGAPORE, Meeyoung Cho in SEOUL,
Aaron Sheldrick in TOKYO and David Stanway in BEIJING; Writing by
Henning Gloystein; Editing by Gavin Maguire and Tom Hogue)
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