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Oil Prices Rebound as US Pulls Out of Iran Deal

May 9, 2018 at 12:42 by Matt Jackson

Oil wiped out Tuesday’s losses after US President Donald Trump announced that he was pulling out of the Iranian nuclear deal. Prices reached their highest level since 2014 as the market prepares itself for new sanctions against OPEC’s third largest oil producer. The news has also had a major impact on other markets, and companies like Boeing are already seeing its detrimental effects, losing approximately $20 million in contracts as a result of the maligned move.

Iran agreed, in 2015, to curb its nuclear activities. The USA, UK, Russia, China, France, and Germany signed the Joint Comprehensive Plan of Action (JCPoA) which saw heavy sanctions against the oil producing country lifted under the condition that they would cut their storage of centrifuges, enriched uranium, and heavy water. At the time, the deal was praised as being a success, but current President, Donald Trump, has long stated that Iran has failed to meet the terms of the agreement and has declared the deal as “insane”. Some critics have slammed the move, saying that he was set to pull out of the deal because it was considered a significant success for former President, Barrack Obama.

The market has long expected Trump to pull the USA out of the deal, and some of these expectations have fueled recent, significant increases in price. However, there is still a lot of uncertainty surrounding the country’s next move, and the fact that sanctions have been imposed almost immediately, demanding that countries cut their import of Iranian oil or face tougher tariffs themselves, has seen supply uncertainty push prices significantly higher on Wednesday.

US allies have been vocal in their bid to try and prolong the deal. UK Foreign Secretary, Boris Johnson, appeared on Fox News in a bid to reach out to Trump, while French President, Emmanuel Macron held talks with the President to try and encourage him to remain a part of the deal. Both bids failed, but the remaining countries have said that the deal is not necessarily dead, even without the US.

WTI crude rose 2.68% to $70.91, having earlier peaked above $71. Brent crude rocketed above $77 in earlier trading but has been pegged back to 76.74 at 13:30 GMT; an increase of 2.53%.

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