Iranian Gas Prepares to Hit the Pipelines

Total, a French oil and gas company, has agreed to purchase 160,000 barrels per day from Iranian oil producer NIOC. The Franco-Iranian contract is expected to be finalized on February 16 after initial meetings took place last month in Paris. Spain, India, Greece, China, and Italy have also begun making deals with Tehran. Iranian president Hassan Rouhani wants to move Tehran away from a solely oil-dependent economy and work towards expanding other industries. On January 28, Rouhani met with French President Francois Hollande in Paris to sign a 40 billion euro trade deal. The deal primarily focused on Tehran’s purchase of 118 airbuses, in addition to an agreement with French car company Peugeot to open up a factory in Iran.

Iran’s economy has entered a much needed period of growth after the removal of sanctions. However, the reemergence of Iran into the realm of international trade, specifically in the petroleum market, may have some negative effects. Iran’s decision to raise its production by 500,000 barrels per day is likely to further contribute to tanking oil prices.

Political challenges to economic trade with the West still remain. Iran’s supreme leader Ali Khamenei, who outranks the president, is adamantly opposed to opening up his country to Western influence. While sanctions have opened many doors, it is evident that Iran will have to deal with its internal political problems before drastic developments can be made.