Trump has options if markets panic on Iran

Far more riding on Trump nuclear deal decision than fate of Iran

Far more riding on Trump nuclear deal decision than fate of Iran

It's not often that an OPEC producer accuses the USA of driving up oil prices.

Dubai was victimized by the decision.

Acting ahead of a May 12 deadline, Trump opted not to extend sanctions relief on Iran, re-imposing nuclear-related economic penalties on the Islamic republic.

But the interest lied elsewhere.

Citi analysts said the latest disruption to oil supplies would probably be the test case for whether Saudi Arabia and the rest of OPEC would keep the already announced production cuts to the end of this year or extend them into 2019, driving oil prices even higher than current levels.

John Kilduff, founding partner at Again Capital, summarized the familiar motivations of traders by saying, "It's the same witches brew of bullish stuff: Iran, Venezuela, the lack of alacrity by Saudi Arabia to bring more oil onto the market" to compensate for the expected drop in Iranian crude exports in the next few months.

Iran exported more than 2.6 million bpd in April, the third-largest crude exporter in OPEC, said Bloomberg, adding sanctions could impact about 1/8 of total exports, quoting analysts telling it.


"We expect that Iranian exports will fall well before the 180-day period until oil sanctions will be in effect, similar to the 2012 sanctions". Iranian crude oil is something India looks up to.

Read: Is Egypt coming down hard on Careem and Uber? Additionally, global inventories have tightened amid strong demand from Asia.

"The rest is likely due to heightened tensions with Iran and other supply shocks and the return of US sanctions could crimp Iranian oil exports", said Bloomberg.

Another unsurprising performance for crude unfolded Friday in the wake of the us pulling out of the Iran nuclear deal and Britain, France, and Germany vowing to support it regardless: West Texas Intermediate settled down 66 cents to $70.70 per barrel, while Brent settled down 35 cents to $77.12. West Texas Intermediate crude rose 26 cents to settle at $70.96.

"The combination of OPEC optimism and simmering geopolitical tensions surrounding the Middle East could elevate WTI towards $72.00 in the near term".

Also supportive to prices was data from market intelligence firm Genscape showing that inventories at Cushing, Oklahoma, the delivery point for US crude futures, fell more than 400,000 barrels in the week to May 11, according to traders who saw the data.

As far as boosting the U.S. economy, the old rule of thumb was that a sustained $10/bbl rise in oil prices would shave about 0.3% off of U.S. GDP the following year.

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