Trump cedes global leadership by pulling out of Iran nuclear deal

Javier Stokes
May 17, 2018

President Donald Trump prides himself on boldness.

Britain's Foreign Minister Boris Johnson was blunt about the chances of avoiding US sanctions that also seek to prohibit foreign companies from doing business with Iran.

A fourth OPEC source also said it was too soon to tell if extra oil was needed, citing Iran's ability to keep much of its exports flowing under a previous round of sanctions.

Middle Eastern oil-producing countries have benefited this year from rising oil revenues, giving them headroom to increase spending to stimulate economies that faced austerity in the wake of the collapse of the crude price four years ago.

Tehran is now threatening to relaunch its nuclear fuel enrichment cycle and escalate military confrontation, all claims worth following to understand Iran's future options in these troubling times.

Trump telegraphed the move, and oil prices shot up in recent weeks as traders anticipated it.

Trump's move to ditch the nuclear deal has infuriated Washington's allies in Europe as well as China and Russian Federation, who cooperated to reach the deal.

We need a strategy that both isolates Iran and closes off Tehran's nuclear pathway by giving the United States and our allies access to the tools of financial and diplomatic pressure needed to confront the totality of the threat posed by the Islamic Republic's revolutionary military dictatorship.

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Changing the regime in Iran is "not the policy of the administration", Bolton said on ABC.

Maltzahn, the German ambassador to Tehran during the European Union's earlier round of nuclear talks with Iran in 2003-05, tells TRENDS the undermining of collective agreements carries dangers for the Middle East and the wider world. It's not clear when an attack could come, nor what form it could take. The country is reportedly set to buy the most oil it has ever bought within any given period at more than nine billion barrels, almost 10 per cent of global demand.

But other countries around the world, including Germany, France and the United Kingdom, have said they would like to keep the original deal, known as the Joint Comprehensive Plan of Action (JCPoA), in place. The White House announcement changed the tactics, but it didn't change the fact that all of us must work together to prevent Iran from ever acquiring nuclear weapons. Sales to Europe are seen by analysts as the more likely to be reduced by the sanctions.

European diplomats acknowledged that the EU support, however honest, risked looking hollow after Trump reimposed an array of wide sanctions last week on Iran that will hit European companies investing there.

Snapping sanctions back on Iran will have an immediate impact on less than 200,000 barrels per day of Iranian oil, according to analysts surveyed by S&P Global Platts. Additionally, global inventories have tightened amid strong demand from Asia.

Other major producers could fill the hole left by Iran. Added to Opec's supply cuts and a determined reduction in output from Saudi Arabia, and it appears that the upward drivers are gaining ground.

"It is exactly when the things don't go well that rationality, calm, predictability, respect, dialogue are the most needed to avoid the worst case scenarios, to avoid conflict to spiral out of control", she said. If that means war - so long as the war is between Iran and the United States and not Iran and Israel - then so be it. In fact, the Energy Information Administration lifted its 2019 domestic output forecast on Tuesday by almost 4% to a record 11.9 million barrels per day. If the policy extends to higher tariffs to protect the United States oil industry as it did with the steel industry, it is possible that a buying frenzy might be sparked to secure supplies at lower prices.

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