Iran goes to polls; no major policy shift seen post-elections

26 February 2016 | Muhamad Fadhil & Kawai Wong

TEHRAN (ICIS)--Iran is holding its parliamentary elections on Friday, with no expected surprises in the results to usher in any major shift in current policy, particularly on the commitment to curb its nuclear programme, according to petrochemical industry players in the Middle East.

Tehran’s compliance with the conditions stipulated in the agreement forged with world powers paved the way for the January lifting of some international sanctions, allowing Iran to resume oil and petrochemical exports to the West.

“We don’t expect to see any significant policy changes. We expect Iranian authorities to maintain status quo,” a source close to an Iranian petrochemical producer said.

Iranians will elect the new slate of members that will occupy 290 parliament seats, as well as the 88 members of its Assembly of Experts, an influential body of Islamic clerics. Election results are expected to be announced in a couple of days.

If results are inconclusive, a second round of elections is scheduled in April.

Once the parliamentary elections are concluded and the winners announced, Iran can hammer out a strategy on how to fully benefit from the recent lifting of international sanctions on the country, according to petrochemical industry players.

Iran President Hassan Rohani, a moderate cleric, will remain at his post until the next presidential elections in 2017.

Rohani, who was elected president of Iran in June 2013, was credited for bringing the country back to the negotiating table with the West over Tehran’s nuclear programme.

Whatever the parliamentary election results, Iran is not expected to backtrack on the nuclear deal with the world powers, industry sources said.

“The government worked hard to push the deal through. Tehran won’t allow anything to derail the agreement, let alone internal politics,” a Dubai-based energy source said.

Political stability will be key as the country prepares to reclaim its status as a major oil and petrochemical supplier in Europe, according to Iranian producers.

“We want to see stability. We are already putting in place steps to increase our exports to Europe,” a source at an Iran-based polymer producer said.

Iran is expected to start diverting volumes of polymer cargoes back to Europe from China – which became the Middle Eastern country’s major export market over the past few years, when the sanctions were tightened.

Iranian suppliers said they are awaiting for clarity on post-sanctions banking and insurance guidelines to emerge before they can resume full exports to Europe.

“Although sanctions are lifted, we are waiting for SWIFT [Society for Worldwide Interbank Financial Telecommunication] to be formally reinstated,” the source said.

SWIFT is the global system used by banks to facilitate international payments.

Meanwhile, Iran plans to increase its crude exports by 500,000 tonnes/day in the coming months, and expects the shipments to reach 1m bbl/day by the end of the year.

Immediately following the lifting of the sanctions in January, Iran signed crude supply deals with French giant Total and Greece’s Hellenic Petroleum.

To boost production, Iran will need to put the 75,000 bbl/day North Azadegan oil field and the 85,000 bbl/day Yadavaran project into production before the end of February. It remains unclear when the two oil fields will be operational.

Iran – a major oil exporter and a member of the oil cartel OPEC – has rejected calls to freeze production to stem the crude price slide amid a global oversupply.

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