Since Iran’s economy is highly dependent on oil and in the current situation we are witnessing a boom in energy transactions in the field of oil and petrochemicals, we must examine the various scenarios of Iran’s oil economy and the conditions under which Iran can benefit the most from the market. Therefore, this analysis refers to the oil factors of Iran’s economy. We suggest you follow this article from Artan Press to the end.
*** Keeping up with the growth of Iran’s oil economy with global markets
The world oil market has returned to positive conditions after a widespread epidemic of the Corona virus, and we are witnessing a boom in trading on the energy exchange. Therefore, it is not bad to first look at the situation in the country during the past year and even more about the situation of oil. Last year, Iran went through inflammatory days in economic indicators, which are unique in the history of Iran’s economy and show the high resilience of Iranian households in times of crisis.
*** Trump targeted Iran’s oil economy
Trump’s presidency and his unilateral policies against Iran overshadowed the development activities of the energy sector, especially the sale of Iranian oil. From November 8, 2016, when Donald Trump took office, until the end of his term, he put maximum pressure on Iran to impose harsh and, of course, unilateral sanctions on Iran without international support.
*** Trump’s failure in the absence of Iran’s oil economy
Trump left Borjam without delay, his demand was to reduce Iran’s oil sales to zero and to completely eliminate Iran’s oil and economy from world markets, which officially began on November 4, 2016. During that period, eight major Iranian customers enjoyed exemptions to purchase a certain ceiling from Iran Oil, due to concerns about a shock to the world market due to the sudden elimination of Iranian oil. But over time, it became clear that Trump’s aspiration to reduce Iran’s oil to zero was never realized.
*** Scenarios for Iran’s economy regarding the United States
In disbelief, Trump’s presidency is over, and Iran is in a position to expand into the booming oil market these days. Now, with the presence of Biden, there are three scenarios regarding the sale of the country’s oil, which we will examine together.
*** Evaluate the opportunities for Biden to return to the Borjam agreement
In this case, Iranian oil can start selling one million barrels per day at the end of 2021 and reach 2022 with its maximum amount, which is between 2 and 2.5 million barrels, including condensate. With this issue, Iran can take back its share from OPEC, which is certainly not pleasant for some OPEC members.
The background is provided for the sale of Iranian oil and this issue can change prices for an indefinite period of time. Of course, the issue of market regulation with the cooperation and coordination of OPEC Plus members can be very influential so as not to affect global crude oil prices. Widespread vaccination and the hope of reviving oil demand can greatly facilitate this. Of course, we should not forget that in this scenario, the return of Venezuela and some other factors are also considered.
*** Evaluate the scenario of the continuation of the current situation
It means the continuation of the current path and its continuation means that nothing special happened in Biden era. This scenario could be a serious one, because Biden’s demands are not less than Trump’s, and he happens to be more sensitive to international issues and will not have a neutral approach to the region, so an agreement with Biden is not easy.
Continuing this path may not be a good choice for the Iranian economy because depreciation and production costs have increased in the current situation in society and inflation has become an undeniable issue due to the high costs of circumventing sanctions. Continuation of this trend will cause Iran to continue on its path with the same amount of oil sales, which will hardly cover the budget deficit and liquidity eliminated due to the increase in the dollar rate.
*** Assess the scenario of disagreement and the return of international sanctions
The cooperation of the international community, especially Europe, with Washington’s position and the return of international sanctions and disagreement on issues facing Iran and the United States could exacerbate the problem of Iranian oil sales. In this case, the negotiation process will be very long and if the two sides are to reach a preliminary agreement, the sanctions will be lifted very gradually; While the reality is that in the current situation Iran needs a quick agreement. In fact, it is a pessimistic scenario that the negotiations will enter an erosive process, in which case, Iran’s economy will remain in a state of expectation and sanctions on the sale of Iranian oil will be tightened.
*** Biden and Trump joint strategy regarding Iran’s economy
An examination of the proposed scenarios shows that Joe Biden and Donald Trump both pursue a common strategy that puts more pressure on Iran. Now Trump calls it “maximum pressure” and Biden calls it “smart pressure.” The fact of the matter is that the Biden team intends to put more pressure on Iran by creating a global consensus against Iran in a smarter way. So in the medium and long term, Biden’s election will not have much of a positive impact on the current state of Iran’s economy. Because the issues between Iran and the United States are not something that was created during the Trump era that can be resolved with his departure.
*** The need to develop the infrastructure of Iran’s oil economy
Of course, we should not forget that sanctions will not be permanent in the end, and this will probably happen near the end of the Biden period.It will fall, so we must increase our oil production capacity so that we can return to the market with strength and regain the country’s share. In our view, increasing oil production capacity is vital and strategic for us. Iran needs to grow in this area and spend part of its oil revenues on developing its oil and gas fields. We are definitely in a situation where oil is a blessing and an excuse for our country to face economic challenges, and this strategic economic highway should not be disrupted.
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