The most important event of the week is today
The oil price has closed above the $70 mark
Oil prices have seen one particular trend during the last few weeks and this trend has one particular direction- skewed to the upside. The US could change its position on Iranian nuclear deal which president Donald Trump has drummed many times as the worst deal in the history. If the US changes its stance on the Iranian nuclear deal, it would have an adverse impact on Iran’s ability to raise foreign investments. A failure of foreign investment would curb the country’s oil output which may remain flat or lower through 2025.
Back in January, President Trump agreed with the current deal however his frustration since then has only grown.
The most important event of the week is today. Investors would be watching the Donald Trump’s decision on Iran very closely. The spillover effects of this aren’t only going to be limited to Iran only, but also it will impact the US relations with allies. So, let’s call it a decision day. The US must make a right decision and Trump should not take any hasty choice which would undo all the hard work done not only by the previous administration but also other nation’s labour.
U.K, France and Germany, all have made it clear for the US that opting out of the Iranian nuclear deal will not be short of a disaster. Speculators have already placed their bets on the unpredictable nature of Donald Trump. The oil price has closed above the $70 mark yesterday because the odds are that he would do what he does the best; jeopardising the deal and surprise the world.
Having said this, he could still surprise world’s leader by agreeing to the deal. Under such circumstances, I would expect retracement in the oil price and the WTI price could move back towards $65-68 range.
Iran, on the other hand, has also been unpredictable in its statements; the recent statement is the friendliest one where the President of the country, Hassan Rounani, confirmed that Iran may still stay in the agreement provided that the country’s demands are met.