Oil jumps to highest since 2014 after USA quits Iran deal

Sean Reid
May 12, 2018

For quite some time, the oil price has been active now after a number of initiatives taken by Organization of Petroleum Exporting Countries (OPEC) and others to keep prices at a competitive level.

Iran had been able to safeguard its oil industry against such threats over the past few years, Zangeneh was quoted as saying by Xinhua news agency.

On May 9, 2018, Donald Trump announced withdrawal from the nuclear deal and said that it was unable to stop Iran from developing nuclear weapons.

Trump's decision could eventually mean less oil on the world market from Iran because now the USA will reimpose economic sanctions on Iran that were lifted as part of the 2015 deal.

But Israel's prime minister Benjamin Netanyahu said it "fully supports president Trump's bold decision to reject the disastrous nuclear deal with the terrorist regime in Tehran".

Mr Le Drian said the commitment of other partners to the Iran deal should be respected. Although, major oil producers are now party to a deal - expiring at the end of the year - to cut their output in order to maintain prices, it is likely that oil levels will remain steady.

The Prime Minister raised the potential impact of U.S. sanctions on those firms which are now conducting business in Iran.

While China cut back on its Iranian imports previous year, it has been buying more lately as the nuclear decision loomed.

Several refiners in Asia said on Wednesday they were seeking alternatives to Iranian supplies.

Crude stocks at the Cushing, Oklahoma, delivery hub rose 1.4 million barrels, EIA said.

Under the financial sanctions, European companies will have 90 to 180 days to wind down their operations in Iran, or they will run afoul of the American banking system.

Major companies that could take a hit because of USA sanctions on Iran are France-based Total, Airbus, and Accor, Germ-any-based Volkswagen, Spain's Melia and US-based Boeing and GE.

Tourism in Iran had also benefited from the nuclear deal, with visitor numbers increasing from 3.8 million visitors in 2012 to over 5 million in 2015, and this could also be affected by renewed sanctions.

Trump's decision to pull out of the Iran deal has left his country diplomatically isolated.

In China, which is Iran's single biggest buyer of oil, Shanghai crude futures posted their biggest intra-day rally since their launch in March, rising more than 4.5 percent to a dollar-denominated record above $75 per barrel.Analysts had little hope that opposition to the U.S. action would prevent sanctions from going ahead.

The sanction bars U.S. individuals and entities from doing business with the affected entities following the move, which was carried out in conjunction with the United Arab Emirates (UAE).

"The average family out there can expect to pay about $200 more than they paid last driving season and about $250 more than the 2016 driving season", says Kloza.

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