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The oil market is bracing for the impact of new US sanctions on major producer Iran as Donald Trump looks set to scrap the “terrible“ nuclear deal signed with the country in 2015.
The US President has until May 12 to decide whether to ditch the landmark deal which reined in Iran’s nuclear programme in return for sanctions crippling its economy being lifted.
Fears that sanctions could squeeze supply from the fifth largest oil producer in the world have lifted oil prices above $75 per barrel. their highest level since 2014.
Previous US sanctions knocked Iran’s production by more than 1.2 million barrels a day but analysts are expecting any measures unveiled by the White House this week to have a smaller impact of around 500.000 barrels. Mr Trump has described the 2015 accord as a “terrible deal“ that “should have never been made“.
Iran appears to be ramping up its oil exports ahead of the likely sanctions. Exports climbed to a post-sanction high of 2.84 million barrels a day in April. according to Bloomberg tanker tracking data.
Iranian President Hassan Rouhani warned in a speech yesterday that the country would “resist“ changes to the nuclear accord. The Daily Telegraph reported on Saturday that the Iranian Government could restart high-level uranium enrichment and restrict access to its nuclear sites for inspectors if the US withdraws from the deal.
French President Emmanuel Macron. who urged Mr Trump to keep the deal in a visit last month. said in an interview yesterday that pulling out of the accord could “open the Pandora’s box“ and lead to war. Foreign Secretary Boris Johnson has flown out to Washington for talks with the Trump administration to help save the deal.
With Brent crude prices surging 1.7pc on Friday ahead of the deadline. Iran’s deputy oil minister Amir Hossein Zamaninia said yesterday that a “suitable price“ for crude was between $60 to $65 per barrel.
Oil cartel Opec has slashed production to lift crude prices but higher prices allow shale drillers in the US to return to production. which could knock the fragile balance of the oil market and reduce OPEC`s market share.
However. Iran’s geopolitical rival Saudi Arabia has signaled that it is aiming to lift crude prices to around $80 a barrel ahead of its national oil company’s blockbuster IPO.
