Iranian Oil Companies Lead Stock Advance After Nuclear Accord

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What's Next for Oil After Iran Nuclear Deal?

Iran’s stocks rose, led by oil and gas companies, after the nation reached an agreement with world powers over its nuclear program, promising an end to a 12-year dispute that led to international sanctions.

The Tehran Stock Exchange’s benchmark TEDPIX Index advanced 0.3 percent to close at the highest level since April. Tamin Petroleum & Petrochemical Investment Co. was the biggest contributor to the gains, with a 3.2 percent increase. Esfahan Oil Refining Co. and Parsian Oil & Gas Development Co. rose 4.3 percent and 1.9 percent, respectively.

Diplomats in Vienna agreed on a deal that curbs the nation’s nuclear program in exchange for an easing of restrictions that have crippled oil exports and cut the country off from global finance. Iran is holder of the world’s fourth-largest oil reserves and second-biggest natural-gas stockpile.

“Iran has always been a market with great opportunities waiting for an opening,” Rouzbeh Pirouz, executive chairman of Tehran-based Turquoise Partners, said by e-mail. “With this deal in place and subsequent removal of sanctions, Iran could turn into an engine of economic growth for the whole region.”

The country’s economy grew 3 percent in 2014 after two years of contraction that were partly the result of sanctions. Iran’s gross domestic product is 15 to 20 percent smaller than it would have been without sanctions enacted after 2010, according to a January report of the Congressional Research Service.

The nation’s currency retreated 0.1 percent to 29,500 per dollar on Tuesday, according to data on the central bank’s website. About 4 trillion rials ($136 million) of shares were traded, almost 40 percent higher than on Monday.

“The selling activity I would say is mostly affected by news of the deal,” Radman Rabii, vice president for international clients at Firouzeh Brokerage in Tehran, said by phone. “When the news of the deal reached the market after about 11 a.m., that’s when the buying activity really started.”

Oil Recovers

Brent crude rose 0.9 percent to $58.36 a barrel as of 4:41 p.m. in London. Oil had earlier declined on bets the easing of restrictions on Iranian crude exports would worsen a glut that has already halved its price over the last year. It recovered as investors judged that the country’s return to the market would be gradual,

The U.S. will allow any nation to buy Iranian oil, according to a draft document of nuclear agreement obtained by Bloomberg News. The accord will see the European Union end an oil embargo and lift banking sanctions if Iran meets its obligations, which include cutting 98 percent of its enriched uranium inventory and destroying two-thirds of its centrifuges, diplomats said. Iran won’t be allowed to buy conventional weapons for five years or ballistic missiles for eight years.

Gulf Stocks

Most stocks in the six-nation Gulf Cooperation Council climbed, led by Oman. Muscat’s MSM30 Index advanced 0.9 percent to the highest in almost four months.

“Oman has tried to maintain the closest relationship out of all the GCC with Iran,” Ghanem Nuseibeh, founder of Cornerstone Global Associates, which advises clients on risk in the Middle East, said by telephone from Jerusalem. “It’s one step ahead of the rest in terms of dealing with Iran, and it could potentially be the biggest beneficiary of a rehabilitated Iran.”

Saudi Arabia’s Tadawul All Share Index added 0.1 percent, Abu Dhabi’s gauge increased 0.4 percent and Qatar’s QE Index advanced 0.2 percent. Kuwait’s measure rose 0.6 percent. Indexes in Dubai and Bahrain were little changed.

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