Iran/USA: Looming Sanctions Oil Market Awaits Trump's Next Move on Iran

Editor: Alexander Stark

After global markets for equities, currencies and metals have all been whipsawed by the uncertainty over what President Donald Trump’s next geopolitical move would be, oil is next on the list.

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Oil market faces tense wait on Trump's next move on Iran sanctions
Oil market faces tense wait on Trump's next move on Iran sanctions
(Source: Bloomberg Finance LP)

Washington/USA (Bloomberg) — It’s too close to call whether Trump will reinstate sanctions on Iran next month and the impact is highly uncertain, according to a Bloomberg survey of oil-market analysts. The 17 respondents saw on average a 50-50 chance of sanctions “snap-back,” which could halt anywhere between zero and 800 thousand barrels a day of exports from Opec’s third-largest producer within the next six months.

That risk looms over Friday’s meeting of some Opec nations and their allies as they gather to monitor supply cuts in Jeddah, Saudi Arabia.

The possibilities for Trump’s next move — and the global response — are wide-ranging. He could choose to reinstate punitive measures when the sanctions waivers are next due for renewal on May 12 , but also has the ability to soften — or even harden — the regime.

Under his predecessor Barack Obama, countries could avoid having their banks or companies blocked from the US financial system by showing they were curbing imports from the Persian Gulf. It’s less certain whether Trump would take the same approach if sanctions snap back, or how much global support such a move would generate. He could in theory impose penalties on any country that buys Iranian crude.