On May 8, President Trump decided to pull the United States out of the Iran Nuclear Deal previously concluded in 2015. Just to remind, the deal was to relieve the economic sanctions from Iran in exchange for reducing its nuclear facilities. In fact, this was made to restrict any further development of nuclear weapons. Apart from US and Iran, there were other powers involved in the deal – UK, Germany, Russia, France, and China. Instead of simple withdrawal, US, in turn, is going to reimpose tougher economic sanctions on Iran. The fateful decision made by the US can increase tensions in the Middle East, especially between Israel and Iran. However, all parties to the deal, excluding the US, agreed to stick to the deal further.
Why is this political even important for oil? First of all, we should not forget that Iran is one of the major oil producers and a full-fledged member of OPEC. Once the sanctions were lifted upon the deal, Iran contributed to the increased supply in the oil market. Now, however, things do not look rosy for Iran. The sanctions can restrain Iran ability to export oil, which can shrink the global supply of oil. The consequences of this event will undoubtedly be visible soon.