AFR: Iran Deal Welcome but Bad for LNG

The re-emergence of Iran into the global economy on Saturday with the lifting of crippling international sanctions that were in place for years is a welcome step forward in an area where the news is often grim – as emphasised during the surprise visit of Malcolm Turnbull to troops in neighbouring Iraq.

But the real significance of this event is the likely effect on already low oil prices now that Iran is free to sell the output of its extensive reserves, and that may affect Australia's exports of LNG, for which spot prices have also slumped. There may well be knock-on effects on commodity prices generally.

Although the US sanctions against Iran remain in place and are unlikely to be removed by the Republican-controlled Congress, foreign investment and the ability to trade internationally should boost the moribund Iranian economy, as well as the presidency of Hassan Rouhani,​ who was elected in 2013 pledging to end the sanctions. It will also boost oil production. MORE