What the Iran Deal really means.

The new deal with Iran halting its nuclear program is exciting, for the next six months, that is. The deal has not solved all problems with Iran and the US and Iran are not just besties, having a throw-back moment to the days of the Shah.

While there is great potential for this deal to be the start of a path towards reconciliation for both Iran and the US, it also has the potential to take a turn for the worse, resulting in even more draconian sanctions. In the deal, Iran will halt their nuclear enrichment program for six months and dilute half of their uranium that is currently at the 20% level of enrichment, effectively adding a month on to their “timeline” for a nuclear weapon. In exchange, Iran will gain access to over $100 billion (USD) of frozen assets and more importantly, Iran will be able to finagle its way into the international oil market.

With the growing demand for Iranian oil, international oil companies, especially Shell and Total, are vying for an expansion of the oil market into Iran. In order for this to occur, the secondary sanctions, which most economists consider illegal, need to be lifted. One of the reasons why the US is negotiating with Iran now, is that US diplomats know that if oil companies were to take the secondary sanctions to the World Trade Organization, the sanctions would be almost certainly voided.

Former CIA analyst, Flynt Leverett argues that if there is an opening for Iranian oil in the global energy market, it would be hard to reverse its access once international companies engage, regardless of imposing new sanctions.

Tehran’s stock exchange includes 339 companies on its website reaching a combined market capitalization of $104.21 billion (USD). Foreign investment has already started to flow into Iran, Swiss and Indian corporations are on the frontier, soon to be followed by other international companies.

Essentially, President Obama has six months to reverse congressional sanctions, no easy task, in order to further progress bilateral relations with Iran. Furthermore, Obama has the ability to impose more drastic economic sanctions through a seemingly willing congressional body if he feels Iran is not holding up its end of the bargain. Confusion surrounding the inspection of nuclear program sites, the process of diluting the uranium, and a general clarity of Iran’s intention of building a nuclear weapon still cloud a trustworthy path towards favorable diplomatic relations. The question is whether or not the pressure from the US and international corporations will stunt the growth of potential future sanctions.

The elephant in the room is most certainly glaring at the US; Saudi Arabia and Iran have maintained a contentious relationship for decades. Saudi Arabia definitely has had its knickers in a twist over the opening of a possible improved US-Iran relationship, but if sanctions were to be lifted and Iranian oil forced the price of oil to decline, Saudi Arabia would stand to lose millions in oil revenues.

The key to a smooth transition will be the implementation of the deal, which depends on President Hassan Rouhani granting UN inspectors access to oversee the dilution process of half of its uranium and whether or not Iran maintains its maximum uranium enrichment level at or below 5%. The ease of sanctions will boost Iran’s economic growth, which could lead to increased levels of international trade which would potentially be irrevocable no matter what ruckus Hezbollah and Assad wreak in Syria and the Levant.