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Oil Markets Could Be Rattled By President Trump's Big Decision On Iran Next Week

Oil Markets Could Be Rattled By President Trump's Big Decision On Iran Next Week
RBC Capital Markets is warning investors that there could be jump in the prices of oil if the White House decertifies the Iran deal.
Next Thursday, October 12 is the date that is being watched very closely by Helima Croft, the firm's global head of commodity strategy. A key speech on Iran policy is expected to be delivered by the U.S. President Donald Trump on that day.
Signed under President Barrack Obama, that curbs Iran's nuclear program, there's speculation that Trump will move to unravel the international deal.
"It's a very significant development that could happen next week," Croft said on a television show.
Trump is also expected to introduce a broader U.S. strategy that would be more confrontational with Iran, an official told the media this week, speaking on the condition of anonymity.
"The market, I think, will be concerned that we can get a return of the sanctions that required importing countries to make significant reductions in their Iranian crude imports every six months, and which bars foreign firms from investing in the Iranian upstream sector," noted Croft.
It's exporting about 2.2 million barrels a day — a year after U.N. economic sanctions were lifted last year, a National Iran Oil Company official said on Sept. 25.
In a delicate situation, fresh sanctions could put demand.
"To really move significantly higher, what we really need to see is clear indications that sanctions are coming back, because right now there's a view out there that the 'U.S. just goes at it alone on sanctions. It won't matter,'" Croft added.
Wall Street does not appear to be getting affected by the prospect of an increased demand due to falling supply.
Breaking a four-week win streak. It was the commodity's biggest weekly loss since March 10, West Texas Intermediate (WTI) crude fell by 2.95 percent to close at $49.29 a barrel on Friday. Friday's loss happened on profit-taking and the return of oversupply concerns.
RBC's year-end forecast calls for U.S. oil to end the year in the low $50s.
"What matters is how much does the United States government, the White House in particular, want to force foreign firms out of Iran. If they want to force them out, they can always threaten to lock them out of U.S. capital markets. And that's a pretty big stick," Croft said.

Christopher J. Mitchell

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