Why the Iran nuclear deal won't promise an oil boom

The merest hint of a successful deal over Iran’s nuclear program is enough to get people excited. And as the country emerges from economic isolation, nowhere is the enthusiasm more keenly felt than in the huge oil firms with a chance to make a splash in one of the world’s most resource-rich nations. But are the conditions really there for a boom that will ripple across our lives?

The Joint Comprehensive Plan of Action (JCPOA) agreed between Iran and the so-called P5+1 nations (China, France, Russia, the U.K., the U.S. and Germany) brings the prospect of an end to international sanctions. There were threats that the deal might be blocked by the U.S. Congress, which were eventually overcome, and this week has apparently seen the green light in Tehran from parliament and the Guardian Council.

Sanctioned
In theory, it looks simple from here. The agreement is that the sanctions would be lifted on the “day of implementation” provided that Iran complies with its promises to restrict its nuclear programme. While both the American and Iranian governments seem willing to move towards practical implementation, there remain doubts surrounding the legislative foundation on which this rests. This political fragility – and one crucial detail in the agreement – are a spanner in the works for delivering what would amount to a revolution in global oil markets.

The appeal is clear to Royal-Dutch Shell, France’s Total and Italy’s Eni. Iran is home to vast oil and gas reserves which to date have not been effectively tapped due to international restrictions. Iran had planned to introduce a new variety of flexible, less risky contracts as well as 50 new production projects to the international petroleum market in a conference to be held in London at the end of this year, but has since been postponed for the fourth time, to early 2016.

The Iranian regime’s inconsistent implementation of the agreement has created a confusing situation. On the one hand, the head of the International Atomic Energy Agency was permitted to visit Iran’s most controversial military site, Parchin, as recently as September 21, contrary to the recent parliamentary interpretation of the deal excluding such inspections. In contrast, in October, Iran successfully fired a long-range ballistic missile and revealed one of its missile bases hidden in a mountain, in what seems to be a deliberately provocative act, undermining their commitments under the agreement.

http://fortune.com/2015/10/21/iran-nuclear-deal-oil-boom/