‘Oil prices could rally to $100 a barrel next year, a level not seen since 2014, as supply risks in Venezuela and Iran strain global markets, according to Bank of America Corp.’
Brent crude oil futures are trading at about US$77 at time of writing. It has increased over 16% since the beginning of the year and over 3% in the last couple of days.
On Wednesday, the US pulled out of the Joint Comprehensive Plan of Action (JCPA), or the Iran deal as it is also known.
The Iran deal is an agreement made in July 2015 between China, France, Russia, the UK, the US, Germany and the European Union (EU) with…yep you guessed it, Iran.
The deal removed sanctions that had damaged and isolated Iran’s economy. In exchange, Iran stopped its efforts to develop nuclear weapons capability.
By withdrawing from the deal, US President Donald Trump is looking to renew sanctions on Iran. It could also penalise any business from anywhere in the world that keeps trading with Iran by excluding them from the US dollar global system.
Is this a way to get North Korea nervous before their meeting with Trump? Who knows.
Whatever the case, China and the EU are desperately trying to save the agreement.
It’s not surprising. Most of Iran’s oil exports go to China and the EU. Cutting off their access to Iran would affect both countries.
Trump has said it is looking to make a new deal with Iran that would also include their missile program.
But while Iran has said it still has a deal with five other nations, they are not holding their breath for a new deal with the US.
As reported by News.com.au the Iranian President Hassan Rouhani said:
‘I have instructed the Iranian Atomic Energy Organisation to take the necessary measures for future actions so that if necessary we can resume industrial enrichment without limit.’
Meanwhile, there are Israeli air strikes going on against Iranian targets in Syria…
…and the US is looking to open their US Embassy in the disputed city of Jerusalem this Monday.
That is, expect that there will be more turmoil in the Middle East.