Benchmark crude oil prices may rise in the second half of this year if Saeed Jalili, Iran's chief nuclear negotiator and front runner in presidential elections, wins the vote scheduled for June 14, analysts told CNBC this week.
The election in Iran – whose economy has been crushed by oil export-limiting sanctions – "could be a pivotal event for perceived risk, potentially pushing oil prices higher" in the second-half of this year and into the first half of 2014, Alastair Newton, Senior Political Analyst at Nomura said in a research report this week.
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Jalili, 47, who wears a prosthetic leg after being injured during the Iran-Iraq war while serving with the Revolutionary Guards, "may emerge as the winner, probably after a June 21 second round," Newton explained. He's "a close ally of supreme leader Ali Khamenei, is from the conservative wing of the ruling elite and has committed to a hard line with the international community in nuclear negotiations."
Cliff Kupchan, Middle East director at political risk consultancy Eurasia Group, believes Jalili's policy on the country's controversial uranium enrichment program, which Iran insists is purely for peaceful purposes, would be little different to that of outgoing Iranian President Mahmoud Ahmadinejad, and believes a hardline approach may continue to keep global oil markets on edge.
"Jalili, as clearly shown by his campaign statements, would be Ahmadinejad 2.0 on nuclear and foreign policy matters," Kupchan said.
Although many commentators say the outcome of next week's election will ultimately be 'engineered' by supreme leader Ali Khamenei -- believed to wield the real power in Iran -- a decisive Jalili win may not necessarily be a foregone conclusion.
Meir Javedanfar, Director of the Middle East Economic and Political Analysis (MEEPAS) says Mayor of Tehran Mohammad Bagher Ghalibaf, 52, is a "powerful contender" for Iran's Presidency.
"Comparatively speaking, Ghalibaf is one of the most popular mayors Tehran has had in the last decade," wrote Javedanfar on May 31 in an analysis in the Al-Monitor website. Ghalibaf is also a former commander of the air force of the powerful Iranian Revolutionary Guard Corps (IRGC) and a former chief of police.
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Despite the hardline credentials, Ghalibaf's strategy has included "showcasing his image as a moderate politician," Javedanfar noted. "After years of the inflammatory and erratic behavior and policies of Ahmadinejad, Ghalibaf is presenting himself as a safe pair of hands at the wheel of the country."
Though not be fully assured, a Ghalibaf win on June 14 may help ease global oil prices if he pursues a less hawkish tone on Iran's nuclear program and foreign policy more broadly.
"While we stand firm against western influence, we also must communicate better with those around us," Ghalibaf said in a post on his Twitter page on April 23.
Reviving Iran's economy tops the electoral agenda.
Sanctions cost the country over $40 billion in lost oil revenues last year, contributing to the Iranian rial losing about two-thirds of its value against the U.S. dollar and driving up inflation into the high double-digits.
Iran's crude exports sank to their lowest in decades in May, according to industry sources and tanker-tracking data, Reuters reported on June 6.
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Crude shipments dropped to 700,000 barrels per day last month, the data from sources showed, about a third of Iran's oil exports before the current round of sanctions, Reuters said. Washington is now seeking to cut shipments to less than 500,000 barrels a day through tighter sanctions.
A higher international oil price would help Iran's leaders to respond to domestic economic pressures, says Cho-Oon Khong, Chief Political Analyst, Shell Strategy and Scenarios at Shell International, although costlier oil is often a double-edged sword for OPEC (Organization of Petroleum Exporting Countries) nations like Iran.
"The higher the oil price, the more alternatives to oil become attractive," Khong told CNBC in an interview on June 6.
"If you're a major oil producer -- whether Iran, or Iraq or indeed any of the other OPEC countries -- what you're looking for is that optimum mean that keeps the oil price at a level you can deliver to your people while at the same time, keeping oil and gas consumption on the other side of the market, going."
That's the challenge for policymakers in oil exporters like Iran -- the 'OPEC dilemma', as Khong called it.
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"As a consequence of the Arab Spring, many of them have in common -- a large, young population, hungry for opportunities -- they need economic growth, and that very much is driven by what governments in the region do so they need a higher and higher level of oil price in order to deliver what their populations expect," he said.
Dominic Schnider, Head of Commodity Research at UBS Wealth Management said the outcome of Iran's election, combined with a pickup in demand in the second-half of the year, possible supply disruptions in the Gulf of Mexico this hurricane season and broader Middle East geo-political concerns, will send Brent crude oil well-above triple-digits by the end of this year.
"The market is easily ripe for heading to $110" in the next 6 months, Schnider said.
(Find the U.S. crude price here.)