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The Middle-East is a fast growing market for multiple industries, with oil, construction, aerospace and defense being the prominent ones. I am trying to get a big picture view of how each of these markets interact with each other and form an interconnected system which is dynamically changing right now. Here are my views on different trends and my interpretation of how activity in one will impact the activity in the other. My focus is especially on the Middle-Eastern aerospace, defense and oil markets and how the Iran Nuclear Deal, should it turn out as expected, will influence them.
Fight for Market Share
OPEC countries want to keep their supply high to compete against western shale-oil and the result will include reduced oil prices. Irrespective of what it is against, the increase in oil supply is happening and is not going to go away soon. As a deterrent to this, ISIS has taken over key oil-supply chains and the Middle-Eastern Administrations need international military support to recover these 'Lost-Oil-Markets.' Getting back the 'Lost Oil markets' from rebel/terrorist groups will add value to the Middle-Eastern oil industry.
Given that this market is already pushing ahead with what may be an 'unrestricted supply' the annexation of lost markets will only pump in more oil into the market, eventually reducing the price of crude oil globally. While more oil can help the Middle-Eastern market gain more market share, the global oil revenues will significantly drop which in turn will impact the spending plans that heavily rely on oil revenues. Although we can't expect that spending to vanish, they will be significantly delayed due to this trend.
Lost Oil markets can only be retrieved through carefully coordinated military operations in those regions which are now under the control of ISIS and other rebel/terrorist groups. The Middle-Eastern defense forces have been modernizing themselves but they are still dependent on western forces for military support [equipment, training and operations]. Now, Western Administrations [NATO countries] don't have the money to spend on elaborate international operations. Even if they did, their help to the Middle-East will indirectly hurt western shale-oil/natural gas industry. Reducing oil prices will impact the Russian military modernization and if this is something desirable to the west, maybe they will let the oil prices continue to fall down. The question is: Will the West think so and if yes will it let the trend take its course?
Secluded Middle-Eastern Commercial Aviation Market [Iran]
On a different angle, US had opened the gates for GE/Boeing to sell commercial aviation hardware to Iran. While this was looking to create a US-controlled [potentially Pro-Boeing] aviation supply to Iran, Al-Naser airlines bought Airbus aircraft [8 A340 and 1 A320] and transferred them to the blacklisted major Iranian airline [Mahan Air]. This means that Airbus has reached the key Middle-Eastern customer faster than Boeing. Iran's commercial aviation industry is expected to take up 400 commercial aircraft, moving forward and this indicates the possibility of a commercial aviation race, should the sanctions be relaxed.
Interestingly, Iran is a member of OPEC countries looking to capture more market share in the oil industry. So, if my crazy view is right to any extent, relaxing sanctions on Iran can get Iran administration's support in restricting oil-supply to get the oil prices rise again. Even if this is not the case, at least the western aviation suppliers will have a new market to sell to. Either ways, the west has more to gain from relaxing sanctions on Iran. The Iran Nuclear Deal is a key instrument for potential opportunities that can lead up to relaxing western sanctions on Iran. The question is: Will the sanctions be relaxed?
The Other Side of Iran Nuclear Deal
From another angle, Israel is concerned with US-driven Iran Nuclear Deal terms. The cause for the concern is the perception of the deal that indicates the possibility of Iran eventually developing a nuclear warhead right after the timeline as agreed over the deal. If this perception were to grow into any other form of concern over Iran's future 'nuclear' capabilities, the Middle-Eastern defense spending will continue to grow [its already growing fast].
Israel has however spent a lot of money on military operations and is potentially looking to sell IAI for cash that can support its defense aspirations. The projects under hold include US DoD FMS programs. Supporting Iran with relaxed sanctions can help west make another friend among OPEC countries but the Nuclear Deal will potentially hurt its friendly relations with Israel, a big-ticket FMS customer for The US. The loss however won't be as big as the corresponding benefit from the growth of the Middle-Eastern defense spending fueled by the concern over the [successful execution of] Iran Nuclear Deal.
The Iran Nuclear Deal, will therefore open up Iran to international [especially western] suppliers and also secure Iran administration's obligation to support any western efforts to influence OPEC countries from continuing to increase oil output. The question is: Will the Iran Nuclear Deal cover such obligations?
What's the Big Picture?
Not supporting Middle-East with turn-key military operations will help curb oil-pressure on western shale-oil and also positively influence the Middle-Eastern defense spending. It is about time the Middle-Eastern administrations developed their indigenous capabilities to sustain any regime stabilization supported by western military help. No point in western forces conducting operations when right after their pull-out, things start getting back to where it was.
On the other hand, securing Iran from sanctions will create opportunities with Iran in the commercial aviation domain, much to the displeasure of its neighbors. So, in the end, Oil+Commercial will stand taller than Defense opportunities in the Middle East.
For Iran's commercial aviation opportunities, Airbus is looking to be a potential winner by reaching the customer even during the times of sanctions, but the competition is very close.
Summing up, the Big Picture view is that the Iran Nuclear Deal will create:
• Successful Commercial Aviation Opportunities in Iran
• Extended Defense Opportunities in the rest of the Middle-East
• Possible influence into the OPEC-driven oil-market
The Big Picture questions are:
• What does the West consider the most important?
• How is the Middle-East planning to prepare itself for any turn of events?