(MENAFN- Gulf Times) Iran should boost trade with its Gulf Arab neighbours if a deal on its nuclear programme sees sanctions and an oil embargo lifted, but higher Iranian crude production could lead to tensions within Opec, analysts say.
Iran's oil exports plummeted as a result of the embargo imposed by the US and European Union, dropping from about 2.2mn bpd in mid-2012 to about 1.2mn bpd now.
Fellow Opec members Saudi Arabia, Kuwait and the UAE boosted production to make up for that, keeping supply levels stable.
Iranian officials have said Tehran is looking to return to pre-embargo levels, though experts say production increases will take time.
"All additional Iranian production will go to export but this will not aggravate the surplus on the market because the increase will be gradual," said Jassem al-Saadun, head of Kuwait's Al-Shall Economic Consultants. "I think it may take Iran a few years before reaching the target of an additional 1mn barrels."
Saudi Jadwa Investments said in a recent report that Iran would add just 150,000 bpd by the fourth quarter of this year.
"We do not see this (lifting of sanctions) resulting in Iranian crude flooding the market in the near-term," Jadwa said.
Eventually though, Iran will be able to reach pre-embargo levels, setting the stage for a showdown within Opec.
Some Opec countries have been pumping at higher levels in a bid to drive out competitors, especially US shale producers.
Saudi Arabia alone is producing 10.3mn bpd-about a third of the Opec output ceiling.
Experts say that once Iran reaches its previous production levels, Saudi Arabia and others will not be keen to reduce their shares of production.
Opec has already seen some tensions, with poorer members such as Algeria, Angola, Venezuela and Libya pushing for overall output to be reduced so prices can rise and they can boost revenues.
"The real problem starts when Opec members begin to fight for quotas amid oversupply and market share disputes," Saadun said.
"If Iran, Venezuela, Algeria and Libya - all of which need to pump more - enter into a dispute with the Gulf producers, then it could be the end for Opec," he said.
However, when it comes to trade with the six countries of the Gulf Cooperation Council (GCC), Iran's new economic freedom is expected to get a boost.
More than 80% of Iran's trade with the bloc is with the UAE, and Tehran is the UAE's fourth-largest trading partner.
Most of that trade originates from Dubai, home to a 400,000-strong Iranian community that runs a large business network.
UAE Economy Minister Sultan al-Mansouri said in June that trade exchange with Iran rose to $17bn (‚¬15.5bn) last year but remains lower than a record $23bn in 2011 before sanctions began to bite.
The vice president of the Iranian Business Council in Dubai, Hossein Haghighi, said he expected a surge in trade after the lifting of sanctions.
Within the first year, total trade between the UAE and Iran is likely "to go up by between 15% and 20%", Haghighi told AFP.
Trade ties are also likely to grow with Oman, which has maintained good relations with Iran.
"Trade ties are likely to improve with UAE but I don't think it will happen with Saudi Arabia and Kuwait as long as the political situation does not improve," he said.
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