Iran trade beckons as Swiss annul sanctions

Swiss companies, including major oil traders Glencore, Vitol and Trafigura, got a major boost as their country became the first nation to lift sanctions on Iran Thursday. 

The trio was among the top five suppliers of gasoline and other refined products to Iran before sanctions forced them to stop dealing with the country in 2012.

In annulling sanctions, the Swiss government said it wanted to promote "a broad political and economic exchange with Iran".

It officially removed a ban on trading precious metals transactions with Iran’s state bodies and the obligation to report trade in Iranian petrochemical products and transport of Iranian crude oil and petroleum products.

Switzerland is home to some of the world’s largest trading houses. The country also represents US interests in Iran in the absence of diplomatic relations between Tehran and Washington since the Islamic Revolution in 1979.

While Swiss companies would mostly likely await the removal of sanctions by the US and other European countries as well in line with the July 14 nuclear accord with Iran, their government’s decision puts the firms in pole position for trade.

Vitol, Trafigura and Glencore are now expected to send their executives to Tehran to discuss new trade ties amid a rush by other rivals to scout for opportunities in the energy-rich country.

Glencore’s head of oil Alex Beard traveled to Tehran in July with a delegation to meet with officials at Iran’s Ministry of Petroleum and the Iranian National Oil Company for “exploratory talks around potential business opportunities”.

Glencore has a relatively established presence in Iran, with a sizable volume of trade reported in 2012, including $659 million worth of metals, wheat and coal.

The commodity trading house supplied alumina to Iranian Aluminum Company (Iralco) before sanctions were imposed on Iran.

Glencore is also a major mining company through its Xstrata arm and the company might be looking for enterprises in Iran’s massive underdeveloped natural resources sector.

Along with Gunvor and Mercuria Energy Group Ltd, they represent Switzerland’s massive commodities sector which is key to the country’s economy.

Bucher Industries AG, a company engaged in the development and manufacture of machinery and equipment, is one of the many Swiss entities with a relatively long-lived portfolio in Iran.

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