Trump's Iran nuclear deal exit means uncertainty over oil prices, supply

Saudi Arabia will work with OPEC and non-OPEC producers to reduce the impact of any shortage in oil supplies

US President Donald Trump's decision to make his country exit the Iran nuclear deal has brought some uncertainty over global oil and gasoline prices. At a time when global oil prices are already very volatile , thanks to production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and Russia, and instability in Venezuela, Trump's move to pull out of the Iran deal also known as the Joint Comprehensive Plan of Action (JCPOA), could curb the OPEC nations' crude oil exports. Iran's oil exports to China, Europe and other countries would most likely decline later this year and in 2019. International oil prices had hit their highest since late 2014 this week on worries that revived sanctions would tighten global oil supplies.

Late on Tuesday, Trump pulled the United States out of the international nuclear deal with Iran agreed in late 2015. The move is likely to hit Iranian crude oil exports and trigger geopolitical tensions in West Asia which is home to one-third of the global daily oil supply. After the departure from the nuclear deal, Trump said the United States will reimpose the "highest level of sanctions" with "additional economic penalties" on the Iranian regime. 

Crude oil prices jumped back to a near three-amd-a-half-year high on Wednesday after slumping as much as four per cent on Tuesday in volatile trading, wven as media reports rattled markets with the announcement of the US walking out of the Iranian deal. Asian shares ticked down as renewed US sanctions on Teheran were seen as disruptive for many companies that have deals with Iran, reported Reuters.

But Saudi Arabia is committed to working with OPEC and non-OPEC producers to reduce the impact of any shortage in oil supplies and support the stability of oil markets for the benefit of producers and consumers. Also, UAE energy minister Suhail al-Mazroui on Tuesday said that OPEC and non-OPEC efforts to rebalance the oil market and encourage oil investment "are progressing well". 
 

"Our goal is to ensure the stability of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry", he further added.

Trump's decision on Tuesday to pull out of the Iran nuclear accord could hugely affect French oil major Total's multibillion-dollar gas project in the country unless it can secure a waiver.

After the Trump's decision, the Iranian President Hassan Rouhani said, Tehran will negotiate with the other signatories of a multinational nuclear deal, such as Europe, Russia and China. According to Al Jazeera, Rouhani dubbed the US withdrawal from the landmark pact as "unacceptable".
 

Saudi Arabia has asserted its continuation to work with the US and other world partners to tackle the threats of the Iranian policies on international security and peace.

According to a report in PTI, refining company sources said Asia's petroleum refiners have shifted purchases to other exporters in preparation for the renewal of US sanctions against OPEC member Iran, which currently exports about 2.5 million barrels of oil a day, with China, India and other Asian nations the primary customers. Any decline in shipments would not be immediate, as sanctions would not come into effect for 180 days.
 

US Treasury Secretary Steven Mnuchin said he does not anticipate major oil price hikes after renewed sanctions hit Iranian production because some countries are willing to increase output to offset such losses. He also said that licences for Boeing Co and Airbus to sell aircraft and components to Iran will be revoked as a result of the reimposed sanctions on Tehran, reported AFP.

Pakistan has invited neighbouring Iran to resume the stalled talks over the Iran-Pakistan Gas Pipeline project. Islamabad has extended an invitation to the Tehran to visit Pakistan and conduct negotiations on the Gas Pipeline Project, reported PTI.