“comment and reply on the following three sources, 100 words for each.
1. There are plenty of risk considerations to keep in mind when contemplating investing in Iran. Some considerations according to a CNBC article from 2019 include political and financial risks. Political risks could involve actions of the host government within Iran in relation to them breaking their agreed uranium enrichment limits, risk of war due to high tensions and lack of diplomatic channel of communication, and corruption within their government that can cause increase in business costs or reduction in revenue. As for financial risks, there are considerable risks involved in regards to economic growth within Iran that can affect the price of oil which is also dependent on how Iran handles their nuclear program.
If I were to invest in Iran, I would have created a future contract to aide in being able to sell oil at a solid price since fluctuation was bound to occur, which would have aided in reducing financial risk.
2. If Trump were to re-negotiate the Iran Nuclear deal, there would a number of implications if one was to invest in that country. One of the first few benefits of such an event happening is the fact that sanctions would be lifted, either partially or fully which would encourage trade between the two nations. When the Iran deal was withdrawn from, the price of importing oil from Iran grew for consumers and manufacturers, while the increase in price benefitted those in the energy sector as well as oil exporters. If a new deal was reached, consumers would benefit from a lower price in oil. For this reason, it would be best for an investor to monitor commodity prices such as petroleum and crude oil.
If sanctions are lifted, the Iranian economy would experience great relief as their GDP fell from 12.3% the year after the deal was implemented to 3.7% once the deal was no longer valid. The sanctions restricted the US, and countries that trade with the US from dealing with Iran. The political implications behind a new deal would involve improved relations between the US and Iran which would ease concerns of any conflict progressing. The financial implications behind such an event would be that Iran could supplement their entry into the world market through growth from improved relations between the two nations.
3. Tensions between the US and Iran pose significant political risk for US investors and businesses operating in Iran. First, Iranian citizens have felt quite antagonistic toward the US for many recent years. This discourages US purchases as Iranians preferences veer away from products associated with the US. Another consideration would certainly be host government actions that interrupt cash flows for US companies. The Iranian government could add corporate taxes, place restrictions on fund transfers and currency conversions as retaliation for US sanctions and threats made by the Trump administration. Iran ranks quite high as a perceptively corrupt nation, meaning that US businesses attempting to compete in the Iranian economic landscape may be disadvantaged through an intentional increase in the cost of doing business and/or a reduction in revenue through government manipulation of policies and law. Threats of a possible war between the US and Iran are another cause for concern when such an engagement may affect the safety of employees and well being of assets, should the business be subject to or targeted in an attack.
Additionally, the Iran Nuclear Program offers its own set of financial costs and risks that affect the Iranian economy and its growth potential. The reactor alone is costing $11 billion (the most costly reactor in the world) and if the program outcomes are not as expected, exchange rates, interest rates and inflation may all be impacted.”