For weeks the crude oil prices have been rising and even breaching the US $80 a barrel mark. However, the situation is now going the other way. The rise was a direct effect of the cutback in production of almost 2 million barrels a day.
The Organisation of Petroleum Exporting Countries (OPEC), along with other producers including Russia, is trying to clear the huge inventory that has built up and to arrest the price fall from 2015.
Economic analysts are also indicating that the announcements made by Russia and Saudi Arabia about their readiness to ease the curbs on the output were also behind the fall.
Despite all this, the oil market will continue to be volatile, especially until the consequences of Trump’s decision to exit the 2015 Iran nuclear deal (JCPOA) are known.
Almost a month ago, President Trump announced that he would be withdrawing from the nuclear deal for several reasons. He said that the Iranian regime’s behavior in the Middle East is unacceptable, especially as the people of Iran are being neglected.
“The deal lifted crippling economic sanctions on Iran in exchange for very weak limits on the regime’s nuclear activity — and no limits at all on its other malign behavior, including its sinister activities in Syria, Yemen, and other places all around the world. In other words, at the point when the United States had maximum leverage, this disastrous deal gave this regime — and it’s a regime of great terror — many billions of dollars, some of it in actual cash — a great embarrassment to me as a citizen and to all citizens of the United States.”
Trump lamented that the previous administration had passed on the perfect opportunity to put a constructive and effective deal in place. He also mentioned that the deal is based on a lie, indicating the evidence about Iran’s history of pursuing of weapons that was released just days before.
Trump said: “The fact is, this was a horrible, one-sided deal that should have never ever been made. It didn’t bring calm, it didn’t bring peace, and it never will.” Not long later, oil prices breached $80 a barrel.
The secondary sanctions that Trump is imposing will effect foreign companies that are carrying out business with Iran. There is a 90 to 180 day grace period for these companies to close their business with Iran, after which Iran is at great risk of being isolated from the international banking system.
The EU is currently making alternative arrangements that will allow trade to continue with Iran. This involves Euro-dominated loans to cover exports to Iran.
The dominance of the United States’ financial system is causing problems for the Europeans and other nations around the world. For example, China is doing business with Iran in another currency.
Instead of scrambling to find legit ways of doing business with Iran, the EU should listen to protesting people of Iran. Why is the EU bending over backwards to do business with a “regime of great terror”?
(Source: NCRI)