Oil Sinks as Iran Open to Fixing Nuclear Deal Amid Trump Fire
© Reuters.
By Barani Krishnan
Investing.com - President Donald Trump railed against Iran’s “blood lust” Tuesday and said sanctions on its oil will be tightened unless it changed its ways. But crude prices fell on Tuesday as Iran’s leader said he was open to tweaking a nuclear deal that made Trump hit Tehran with sanctions in the first place.
U.S. West Texas Intermediate crude and U.K. Brent oil fell more than 2% each after Iranian President Hassan Rouhani said he was open to discussing its 2016 nuclear pact with the United States and other foreign powers, an agreement that Trump tore up last year.
WTI was down $1.36, or 2.3%, at $57.28 per barrel by 1:12 PM ET (17:12 GMT).
Brent slid by $1.63, or 2.5%, to $63.14.
Rouhani, attending the United Nations General Assembly in New York, told reporters that he was willing “to discuss small changes, additions or amendments to (the) nuclear deal if sanctions were taken away,” Reuters reported.
Trump, who later addressed the assembly, said “no responsible government should subsidize Iran’s bloodlust”, referring to the constant “Death To America” chants by the Islamic Republic.
Washington has blamed Iran for last week’s attack on Saudi Arabia’s oil facilities, an accusation that has gained momentum in the past 24 hours as Europe’s big three — Britain, France and Germany — joined in fingering Tehran for the Sept. 14 air raids.
The three nations were original signatories to the 2016 nuclear deal with Iran and had supported the Islamic Republic through much of its sanctions row with the United States.
But the three also urged Iran on Monday to accept “a long-term negotiation framework for its nuclear program” — a suggestion seen as coaxing Iran to renegotiate its 2016 agreement with world powers. Rouhani seemed headed that way on Tuesday, after a meeting with French President Emmanuel Macron, who reiterated that message.
Trump, in his speech to the assembly, indicated no mood to go easy on Iran.
“As long as Iran’s menacing behavior continues, sanctions will not be lifted,” said the president, who reinstated a U.S. oil embargo on Iran last November after pulling out of the 2016 nuclear pact earlier in the year. “They will be tightened.”
But oil traders who have grown familiar with Trump’s vacillating ways hedged for the possibility that he would meet with Rouhani after all.
A U.S.-Iran summit has been in the cards for months, with Trump even suggesting days before the Saudi attack that he might be open to lifting sanctions as precondition to the talks. Rouhani seemed resistant to any diplomatic efforts then, though the Iranian leader seems to the one extending the olive branch this time, even coming to the U.N. with a peace plan for the Middle East.
Trump’s zeal to be known as a dealmaker is not lost on political strategists who point out that a new Iran nuclear agreement would be a plum prize for the president as he heads into the 2020 reelection campaign.
Iran said in May that it intends to produce at least 1.5 million barrels per day of oil if it is to enter and stay in a new nuclear deal with world powers. That could be an onerous burden for a market that has completely discounted Iranian production since the U.S. sanctions came into force in November 2018.
“Whatever Trump says, I still believe he will want to make a deal with Iran and that’s what the market fears — the oncoming of additional supply it isn’t prepared for,” said John Kilduff, founding partner at New York energy hedge fund Again Capital Management.
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