SANCTIONS: President Trump has added fuel to the fire
WHEN IT comes to the United States and Iran, one thing’s for sure: Trump is done turning up the heat, opting for a full-on threat about total obliteration instead.
In case you missed it, here’s what happened. In response to the latest bout of sanctions levied against Iran by the United States, Iranian president Hassan Rouhani claimed the White House was suffering from a mental disability.
True to form, president Trump was on that Twitter phone faster than you could say ‘Ayatollah’ with his own host of retaliatory hostilities, promising that an attack on “anything American will be met with great and overwhelming force” and threatening Iran with “obliteration”.
What are the sanctions?
Perhaps the more appropriate question would be “what aren’t the sanctions?”, considering the long-standing acrimony between the US and Iran, dating back to 1979, sanctions have been handed out as gratuitously as holiday cards.
The most recent are intended to coerce Rouhani’s regime into compliance over the ever-controversial nuclear deal and curb the formation of even more hostilities. But as a result of this latest incident came a new type of sanction, directed at Iran’s Supreme Leader the Ayatollah Khamenei, whom Trump holds responsible for such incidents as the shooting down of US military drones and alleged attacks on oil tankers off the coast of Oman. Although the specifics of the sanctions remain vague, president Trump was quoted as saying they are intended to “deny the supreme leader and the supreme leader’s office and those most closely affiliated with him and the office access to key financial resources and support”.*
Whether or not you’ve been following this on the news, it’s not hard to guess the main pain cause by these sanctions. Oil, of course. According to Oil Price, so far the sanctions have decreased Iran’s oil exports from 2.5 million barrels per day down to under 500,000 barrels.** Although Iran disputes this figure, all you have to do is look at oil’s recent market volatility.
According to Market Watch, oil prices in the United States fell on Tuesday, 25th June 2019 – the day the latest round of sanctions were levied. West Texas Intermediate dipped 0.1 per cent to $57.83 a barrel on the NYMEX, while Brent Crude climbed up 19 cents/0.3 per cent to $65.05 a barrel on ICE Futures Europe.*** To stay up-to-date on the flux of oil prices, tune into financial sites like Vestle live rates to catch such crucial market performance as it happens.
What might happen next?
When it comes to improved diplomacy between the United States and Iran, who can tell? Despite the constant exchange of hostilities between president Trump and president Rouhani, both sides have expressed a desire to enter into negotiations. Considering the manner with which both countries have handled the situation so far, this carries as much hope as it does futility.
Iran remains bitter over pressure exerted by the Trump administration after pulling out of the 2015 nuclear deal in 2018, and it’s possible it believes that the main goal of the US sanctions is to diminish its oil exports entirely in order to encourage nuclear concessions. The US, on the other hand, has never been shy about doing everything in its power to prevent Iran from manufacturing nuclear weapons, spurring ongoing animosity.
However, when it comes to oil’s financial performance, hope may come in the first week of July when OPEC and its ally countries meet to discuss, among other things, production caps for the second half of 2019. Aa analysts from ING remarked: “This is something that a number of OPEC members, including Saudi Arabia, have stated that the market needs.”*** Will the OPEC meeting bring about a boon for oil or will the ongoing drama in the Middle East between Iran and the US continue to stir things up? To stay properly informed, keep one eye on the news and the other on the financial markets, such as the updates provided by Vestle live rates. The more you know, the better off you’ll be, especially with something as extreme as obliteration on the table.
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