OIL WARNING: Trump’s decision on Iran nuclear deal could push up prices

Thursday, April 26, 2018
By Paul Martin

THE US pulling out of the Iran nuclear deal and US sanction being placed on the Middle East state would see oil prices rising as well as 250,000 to 350,000 barrels of Iranian crude oil being put at risk, a top strategist has warned.

Thu, Apr 26, 2018

Ehsan Khoman, head of research for Middle East and North Africa (MENA) at MUFG bank, the largest bank in Japan believes the oil market is underestimating the impact the collapse of the Iran nuclear deal.

Mr Khoman told CNBC: “We think at least 250,000 to 350,000 barrels of Iranian crude a day could be at risk of disruption if sanctions are brought back into place.

“In terms of the upside risk to oil prices, we think that anything north of $80 for Brent crude and WTI above $75 could firmly take place.

“We think markets have not fully priced-in the size and magnitude of Iranian sanctions.”

Brent crude is currently priced at $73.83 per barrel and West Texas Intermediate (WTI) at $68.43.

In recent months, oil prices have been rising following a long period of stability caused by a global glut in supply.

Figures from Organisation of the Petroleum Exporting Countries (OPEC) show Iran produces 3.8 million barrels of oil per day, deeming it the third largest producer of the 14 member organisation after Saudi Arabia and Iraq.

The decision from President Donald Trump regarding his decision on whether he will pull out of the deal will be made on May 12.

Mr Khoman said: “High geopolitical tensions between the US and Iran certainly don’t bode well for oil markets. Our base-case scenario is that Donald Trump will not sign the nuclear waiver agreement on May 12.

“He has been articulating that in tweeting policy and through other statements.”

Mr Khoman also believes members in Mr Trump’s circle are critics of Iran such as nominee for secretary of state Mike Pompeo and John Bolton, national security adviser increases the possibility of the US reimposing sanctions on Iran.

The expert said: “Of course, we’ve had the French president there trying to reason with Trump and to see if they can come to some kind of new deal.

“And then German Chancellor Angela Merkel is going to Washington if she can do something to get Trump back to some kind of accommodative stance over Iran.”

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