US President Donald Trump displays a memorandum after announcing his plan to withdraw from Iran deal The United States on Tuesday pulled out of the 2015 international nuclear deal with Iran, casting uncertainty over global oil supplies.
Iran is a major oil producer and the US move pushed global oil prices higher.
US President Donald Trump in a televised address from the White House said that he would reimpose U.S.
economic sanctions on Iran to undermine "a horrible one-sided deal that should have never, ever been made." The 2015 agreement, worked out by the United States, five other world powers and Iran, lifted sanctions on Iran in exchange for Tehran limiting its nuclear programme.1) Trump's move is also seen as risking worsening already-tense relations between Iran and US allies in the region.2) Iran is the third-biggest producer among the Organization of the Petroleum Exporting Countries (OPEC).3) It produces about 3.8 million barrels per day (bpd), or about 4.0 per cent of the world's oil supplies.4) Following the US announcement, crude oil prices on Wednesday jumped back to near 3 1/2-year highs.5) Global stock markets were jittery with Asian equities edging lower as renewed US sanctions on Tehran were seen as disruptive for many companies that have deals with Iran.6) "In the very short term, it looks as if the impact of heightened geopolitical worries was limited to oil markets.
But that is not the end of the story," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.7) "US sanctions could affect various industries.
And tensions between Iran and Israel look set to intensify.
Those will begin to cap share prices," he added.8) Emerging stock, bond markets and currency markets, which have been under pressure even before the US announcement, could be hit further as risk sentiment sours.9) Emerging markets have been clobbered in recent weeks by concerns about capital outflows, as the prospect of higher US interest rates attracts investors back to US bonds rather than riskier assets.10) Meanwhile, news agency Bloomberg said reported that Saudi Arabia has promised to work with other OPEC nations to "mitigate" the impact in the oil market of the U.S.
exit from the Iran nuclear deal." (With Agency Inputs)