Iran Deal Could Usher in New Era of Trade, Opportunities

This past weekend's deal between Iran and the P5+1 (the UN Security Council's five permanent members plus Germany) amounts to only minor changes in a series of international sanctions that have left Iran isolated from much of the world and cut off from global markets.

Still, the six-month interim deal is a historic moment, and one which could be followed up by a final deal that starts Iran on a path of full accord with the rest of the world and reintegration into the global economy. 

Several years of worsening sanctions have left Iran an economic basket case with soaring inflation and acute shortages, and its oil infrastructure is in rough shape. Still, nearly 80 million people and one of the world's largest proven energy reserves make a recipe for recovery -- and opportunities for a lot of companies.

The first and most obvious beneficiaries of an Iranian recovery would be oil companies. It's impossible to say for sure which companies would get those development contracts, but the recent Iraqi deals give us some pretty good hints.

Petrochina (NYSE: PTR  ) and Russia's Lukoil (NASDAQOTH: LUKOY  ) would be prime candidates for these potentially lucrative contracts: Not only are they both major players in Iraq, but Russia and China have retained better ties with Iran than the rest of the P5+1, meaning their companies will likely have an edge in negotiations that ExxonMobil and France's Total SA lack.

Re-modernizing an economy of 80 million people is about more than just oil; it means importing all sorts of consumer and industrial goods that have been in short supply in recent months.

As with post-Soviet Russia or China when it opened up to Western markets, it would be open season for everybody -- but Iran's isolation was not self-imposed, and some companies have an existing presence, putting them at a clear advantage.

Samsung (NASDAQOTH: SSNLF  ) is a major example. The company is a popular cellphone-provider in Iran, and it took a large share of the Iranian market after Nokia pulled out. It even has an Iranian localized app store all ready to go for its phones. The app store was shut down earlier this year due to U.S. sanctions, but it could doubtless be brought back online much more quickly than potential rivals could build a brand-new competing service.

Siemens (NASDAQOTH: SIEGY  ) has long-standing industrial ties with Iran as well. This was made particularly apparent when the Stuxnet worm was designed to target Siemens systems in an attempt to sabotage Iran's civilian nuclear program -- but quickly spread into other industries and eventually other countries. Stuxnet aside, Siemens is already a big player in Iran and could benefit enormously as Iran's economy recovers and its industries look to modernize. 

There are still a lot of possible obstacles to an Iranian rapprochement, but the potential is impossible to ignore, and the benefits are far-reaching. Even though Israel's government has harshly criticized the diplomacy with Iran, the Israeli stock markets have seen gains since the interim deal was announced. Investors clearly see Israel not going to war with Iran as good news for the Israeli economy and are hoping for a peace dividend there.

The same is potentially true across the world, and the simple answer is that virtually everyone will benefit from reopening the Iranian market. Who will benefit the most remains an open question -- but a potentially lucrative one for those who keep a close eye on the talks.

OPEC's Worst Nightmare
Imagine a company that rents a very specific and valuable piece of machinery for $41,000 -- per hour (that’s almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company’s can’t-live-without-it business model that he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report reveals the company we’re calling "OPEC's Worst Nightmare." Just click click here to uncover the name of this industry-leading stock and join Buffett in his quest for a veritable landslide of profits!


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2745388, ~/Articles/ArticleHandler.aspx, 10/25/2014 2:46:41 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement