Oil prices fall as Iran nuclear deal retains support

US oil prices climbed above $70 per barrel on Monday for the first time since November 2014. Sergei Karpukhin  Reuters

Oil prices could rise because of the decision by the United States to withdraw from the Iranian nuclear agreement, two analysts said on Tuesday.

While there are fears that a nuclear escalation between Iran and Saudi could potentially take place, any such actions are incremental, and long- term prospects, giving markets plenty of time to adjust.

The HPCL management has indicated that in case crude prices continue to rise, consumers will have to bear a portion of the cost.

Dubai was victimized by the decision.

But what will the economic impact be on Iran and its trading partners?

"We will be instituting the highest level of economic sanction".

Trump repeated his tough stance on the deal, saying it had failed to prevent Iran from developing nuclear weapons or supporting terrorism in the region.

Instead, he cited a cache of Iranian documents made public by Israel on April 30 that he said showed Iran's leaders lied when they denied ever pursuing a nuclear weapons project.

But the interest lied elsewhere.

Higher oil prices boost the USA economy and employment and increase taxes the federal government collects, according to Zanganeh.


Oil hit its highest level in 3.5 years as investors anxious that Trump's decision would increase risks of conflict in the Middle East and curtail oil supplies in a tight market. Goldman Sachs said in a note that it was unclear if a million bpd in exports would be at risk as it was from 2012 to 2015.

Crude prices fell in a see-saw session on Friday, retreating after early gains as it looked likely that USA allies would push to maintain a deal with Iran, which could keep that country's crude exports on global markets.

Previous sanctions limited production to 1 million bpd for exports.

Production shortage in Mexico and Venezuela in the past few months has further reduced global crude supplies and pushed up oil prices.

Read: Is Egypt coming down hard on Careem and Uber? "United States shale producers turn the taps back on the longer prices remain above break-even", said Mr Kerry Craig, global market strategist at J.P. Morgan Asset Management.

"The rest is likely due to heightened tensions with Iran and other supply shocks and the return of USA sanctions could crimp Iranian oil exports", said Bloomberg.

The West Texas Intermediate (WTI) for June delivery lost 1.67 USA dollars to settle at 69.06 dollars a barrel on the New York Mercantile Exchange, while Brent crude for July delivery was erased 1.32 dollars to close at 74.85 dollars a barrel on the London ICE Futures Exchange.

US West Texas Intermediate (WTI) crude futures also marked a November 2014 high, at US$71.84 a barrel, before edging back to US$71.78 a barrel. "If reimposed, companies and countries will have 180 days to reduce their consumption of Iranian oil or face penalties from the U.S.".

This - along with an output cap by Russian Federation and OPEC, rising USA demand and an improving economy - has helped send the price of oil to highs not seen since late 2014, though profit-taking saw both main contracts retreat yesterday.

United States crude inventories C-STK-T-EIA fell by 2.2 million barrels in the week to May 4, to 433.76 million barrels, according to the Energy Information Administration (EIA), slightly above the 420 million barrels five-year average level.

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