European oil companies might be thinking twice about returning to Iran's oil fields with Donald Trump bound for the White House, according to Helima Croft, head of commodities strategy at RBC Capital Markets.
French oil giant Total announced last week it would lead a consortium that includes the China National Petroleum Corporation to develop Iran's South Pars gas field. Others have told CNBC they are interested but waiting until the investment outlook becomes clearer.
Iran's oil production has grown steadily over the last year to about 3.7 million barrels per day following the lifting of sanctions that hobbled its crude exports. But the recent presidential election puts a question mark over its continued recovery, Croft said.
"Iran has ramped up. Iran is back to pre-sanctions levels, but can Iran do much more without foreign investment? And this is where the Trump election becomes very, very important," she told CNBC's "Power Lunch."
Croft questioned whether European oil majors will be willing to invest in projects to further boost Iranian oil production in the wake of Trump's victory. Trump threatened during the presidential campaign to rip up the deal Iran reached with international negotiators last year to limit its nuclear program in exchange for sanctions relief.
With Trump in office, the European energy firms lining up to develop Iran's massive oil and gas reserves face a big risk: that his administration will exploit provisions in the nuclear accord that would put back in place sanctions that penalize companies that invest in Iran's oil and gas sector.
Trump could set that process in motion by refusing to certify that Iran is compliant with the terms of the deal, RBC said in a note last week. Iran has twice exceeded limits on the amount of heavy water it is allowed to possess, though the U.S. energy secretary and State Department have said Iran has immediately sought to correct the problem.
RBC, however, said a Trump administration "may not be so magnanimous" and could use a technical violation to snap sanctions back into place.
Croft said renewed sanctions would basically leave foreign companies with a choice: Do business with Iran or get locked out of the U.S. financial system.
"I think it will give them pause before going back in there, because the contract terms aren't great. It's not the easiest place to do business. So you have to choose between Iran and the U.S. — I still think you're picking the U.S.," she said.
To be sure, the prospects in Iran are stunning. It is home to the world's second largest natural gas reserves and its fourth largest deposits of crude oil.