Oil prices may be set to rise if Trump scraps Iran nuclear deal – here’s why

by | 26 Apr, 2018

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.

Related: Commodities become best performing asset class as crypto magic fades

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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