Presidential elections in Iran will be held on Friday, May 19 2017. This will be the twelfth presidential election in the country and will determine whether the current moderate regime can stay on power and continue to ease tensions and country’s re-integration into global economy or hard line conservatives will regain power and start raising tension between Iran and the western world.
Iran’s relations with the US, Europe and other big economies were under strong tensions since Islamic revolution in 1979 and peaked in the decade of 2000 over Iran’s nuclear program which was developed and promoted by hard line conservative parties that were on power during that period. Major world countries and a number of UN members imposed sanctions on Iran that time.
Sanctions lasted until 2015 when moderate reformist President Hassan Rouhani successfully negotiated removal of sanctions in exchange for the revision of Iran’s nuclear program. Removal of sanctions also opened the prospect for Iran’s more peaceful relations with major world powers and neighboring countries.
Current president Hassan Rouhani who represents moderate and reformist bloc, is running for re-election and has high chances to be re-elected, according to the polls.
His main opponent is Ebrahim Raisi from Combatant Clergy Association.
Polls also show that other two candidates: Mostafa Hashemitaba from Executives of Construction Party and Mostafa Mir-Salim from Islamic coalition party have minimal chances of winning the election.
Two candidates have withdrawn from the campaign: Eshaq Jahangiri and Mohammad Ghalibaf.
Iran is the fourth-largest holder of oil reserves in the world (with an estimated 158 billion barrels), and the sixth-largest oil producer, daily production of 3.6 million barrels.
Following the signing of the nuclear accord, economic sanctions against Iran no longer prohibited foreign investment in the country. As a result, Iran opened up bidding to foreign oil companies in 2016 for increased development of the country’s oil reserves. The action is expected to attract more than US$200 billion in investment for oil and gas exploration from major oil companies around the world.
Victory of incumbent president is expected to keep overall picture unchanged and continue current political direction of Iran with major world powers and neighboring countries.
That may result in rising pressure on crude oil, natural gas and gold. However, crude oil price has recently received significant support from agreement between top oil producers Russia and Saudi Arabia about extension of oil production cut agreement that may offset negative impact on oil prices from Rouhani’s victory.
Gold may also ease on lower demand as Rouhani’s victory on Iran’s election will neutralize political uncertainty that usually triggers higher demand for safe haven assets.
Conversely, victory clerical and fundamentalist candidate Ebrahim Raisi would likely raise tensions between Iran and major world economies that would result in higher oil and natural gas prices and increase demand for safe haven assets that would push gold price higher.
Also, such scenario would bring European benchmark stock indices under pressure, as Iran is currently maintaining good relationships with the European Union and negative signals from changing existing politics would destabilize stock markets.
Preliminary results are expected in late hours of Friday, while final results will be announced during the weekend and would affect markets on Sunday’s opening.