Oil prices may be set to rise if Trump scraps Iran nuclear deal – here’s why
A street scene in Iran
Investors in oil should keep an eye on this story. It’s likely that President Trump will withdraw from the Iran nuclear deal created under President Obama in 2015, despite urges from France’s leader Emmanuel Macron to keep it. Speaking to Congress amidst a state-visit to the US this week, Macron said that parties to the deal (including France, the US, UK and Russia) “should not abandon it without having something more substantial instead.”
But for Trump, the issue is thorny, given that he frequently mentioned scrapping the Iran agreement in rallies on the campaign trail and criticised Obama for being weak on foreign policy in the region. To make a U-turn now might upset his base, and given that he has kept most of his campaign promises so far, it’s unlikely he will relent. Compounding matters is the fact his new National Security Adviser John Bolton is a noted hawk on Iran, having called on the US to bomb Iranian facilities in the past.
If the deal is indeed cancelled, this means the US would then be free to place further sanctions on Iran’s economy and oil exports. Given Iran is a huge player in the oil market, a possible upset in supply due to US sanctions would cause prices to rise.
Today oil futures spiked, with some experts forecasting a rise above $80 for Brent Crude in the near future. The price currently sits at $74.43 a barrel.
Remember that you can trade a plethora of oil companies and oil-related ETFs in the Invstr Portfolio to take advantage of rising prices, including the USCF United States Oil Fund and the PowerShares DB Oil ETF, which has generated a 15.47% return this year through periods of rising prices mostly owing to OPEC production cuts.
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