- Europe Shakes Ahead Of Decision
‘Dotun Akintomide With Agency Report
Global oil prices took a deep after hitting a record high in 3 and half years on Tuesday as investors painstakingly await the announcement by President Donald Trump on whether the United States will re-impose sanctions on Iran.
Trump said on Monday that a decision on whether to remain in the Iran nuclear deal or to impose sanctions would be announced Tuesday by 2:00pm EDT (1800 GMT) four days earlier than expected.
Should Trump pull the United States out of a multi-nation agreement on Tehran’s nuclear program, Iranian crude exports could be hit, adding to tightness in the oil market, which is coming back into balance after years of glut.
U.S. West Texas Intermediate (WTI) crude futures had dropped 73 cents, or 1 percent, to $70 a barrel by 0240 GMT.
At one point they fell below $70, after settling above that level for the first time since November 2014 on Monday.
Brent crude futures were down 63 cents, or 0.8 percent, at $75.54, having jumped 1.7 percent to settle at $76.17 a barrel in the previous session.
Trump is likely to either announce he will not be renewing a waiver on sanctions, leading to a “significant reduction” in Iranian oil sales within six months, or will restate his opposition to the nuclear agreement, Barclays Research analysts said in a report.
“Regardless, his foreign policy continues to ignite tensions in the main oil-exporting center and is, thus, price supportive,” they said.
If Trump restores core U.S. sanctions, under U.S. law he must wait at least 180 days before imposing their furthest-reaching measure, which is to target banks of nations that fail to significantly cut their purchases of Iranian oil.
Analysts at RBC Capital Markets said Iran’s exports could be cut by 200,000 to 300,000 bpd as a result. Iranian officials, however, said that the country’s oil industry would continue to develop even if the United States exits the accord.
Under the deal to limit Iran’s nuclear program, formally known as the Joint Comprehensive Plan of Action, the U.S. agreed to ease a series of sanctions on Iran and has done so under a string of “waivers” that effectively suspend them.
Trump has repeatedly threatened to withdraw from the deal, unless France, Germany and Britain – which also signed the agreement – fix what he has called its flaws.
Meanwhile, European allies already are edgy ahead of the decision to be announced by Trump.
Allies in Europe have insisted that the deal has successfully halted Iran’s nuclear ambitions.
However, Trump has consistently threatened to pull out of the 2015 agreement because it does not address Iran’s ballistic missile program or its role in wars in Syria and Yemen, and does not permanently prevent Tehran from developing nuclear weapons.
A senior U.S. official close to the process said France, Germany and Britain had moved significantly to address Trump’s concerns over the ballistic missile program, the terms under which international inspectors visit suspect Iranian sites, and “sunset” clauses under which some terms of the deal expire.
But it was not clear whether those last-ditch efforts had made enough progress to persuade Trump to stay in the pact.
“The big question in my mind is does he think the Europeans have moved far enough so that we can all be unified and announce a deal?” the official told Reuters.
European leaders have warned that a U.S. withdrawal would undo years of work that led to and sustained a landmark deal that has kept nuclear weapons out of Iran’s hands.
Trump, in a tweet on Monday, said he would make the announcement at 2 p.m. (1800 GMT) on Tuesday.
The Iran deal, negotiated during the administration of Trump’s Democratic predecessor, Barack Obama, eased economic sanctions on Iran in exchange for Tehran limiting its nuclear program.
But Trump has called it the “worst deal ever negotiated” and he wants Britain, France and Germany – which also signed the pact along with Russia and China – to toughen up the terms.
In the past few weeks, the Republican president has consulted either in person or by telephone with leaders of all three countries.
British Foreign Secretary Boris Johnson made the rounds in Washington on Monday, including talks with Vice President Mike Pence and Secretary of State Mike Pompeo.
Still, European diplomats privately said they expected Trump to withdraw from the agreement.
Under the deal, known as the Joint Comprehensive Plan of Action (JCPOA), the United States committed to ease a series of U.S. sanctions on Iran and it has done so under a string of “waivers” that effectively suspend them.
Trump has until Saturday to decide whether to extend the waivers or withdraw and reintroduce sanctions related to Iran’s central bank and Iranian oil exports.
That would dissuade foreign companies from doing business with Iran because they could be subject to U.S. penalties.
Iran has said it will not renegotiate the accord and threatened to retaliate if the United States pulls out, although it has not said how.
Diplomats and military experts say Tehran could seek to resume its nuclear arms program or step up its military involvement in Iraq, Syria, Yemen and Lebanon.
Iranian President Hassan Rouhani suggested on Monday that Iran might remain in the nuclear deal even if Trump abandons it and imposes sanctions.
But he also warned that Tehran would fiercely resist U.S. efforts to limit its influence in the Middle East.