With oil-related sanctions a nagging question for Iran, a central bank official said he’s mindful of risks, adding economic growth depended on non-oil sectors.
“In the aftermath of the implementation of the Joint Comprehensive Plan of Action, we are trying to plan and implement effective measures for reintegration of the Iranian economy into the global markets,” Valiollah Seif, governor of Central Bank of Iran, said in remarks delivered to a financial conference in Paris.
U.S. President Donald Trump decided to remain aligned with the JCPA — the U.N.-backed Iranian nuclear deal – in mid-January and issue a waiver on oil-related sanctions on Iran. He said then it would be the last time unless the agreement was somehow amended.
A non-waiver decision would’ve sidelined the estimated 1 million barrels of Iranian oil per day on the market already and would come at a time when the market has little room for disruptions. A market titled toward the supply side two years ago could tolerate the removal of barrels, but the gap between supply and demand has all-but vanished.
Iran’s Central Bank said all segments of the economy were improving and growth in gross domestic product was around 4 percent on the back of increasing oil production and exports.
“Iran’s economy generated 650,000 jobs in the past fiscal year and continued to create more jobs during current fiscal year,” the official said. “However, the growth projection for the current year will be mainly reliant on the non-oil sectors of the economy.”
Iran is the third largest oil producer in the Organization of Petroleum Exporting Countries. Commodity pricing group S&P Global Platts reported that Iran produced an average of 3.83 million barrels per day last month, an increase of 100,000 bpd because of incremental gains from its South Yaran field. Production two years ago was around 3.5 million bpd.
In November, the Central Bank of Iran reported tax revenue generated from the sale of crude oil and oil products increased more than 80 percent from last year.
Campaigning for a second term in office earlier last year, Iranian President Hassan Rouhani said easing international sanctions and addressing a high rate of inflation were national priorities. As easing sanctions make it somewhat easier to do business in Iran, Rouhani boasted after the elections that banking channels to the world could be opening up.
Iran’s Central Bank said it’s managed to reach medium- and long-term financial agreements with partners from China to Denmark since JCPA implementation. Seif added the bank is committed to aligning its standards with international regulations in order to integrate further into the global economy.
“Our banks are required to deny international banking services to customers who do not meet these standards,” he said. “We are mindful of the risk exposure of our correspondents and counterparts and see their risk as ours.”
By Daniel J. Graeber