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Possible sanctions to Iran loom over the oil market

IRAN (OBSERVATORY) –¬†Donald Trump deserved the notoriety of investors and will be remembered for a long time with his tweets about the missile strike in Syria, which led to unexpected stock price quotations. Now the oil market is on the turn, say analysts surveyed by Bloomberg.

The global markets for stocks, currencies and metals are once again feverish due to uncertainty about what the next geopolitical move of President Donald Trump might be.

While it is difficult to say whether Trump will restore sanctions against Iran in May: the possible consequences of this step are also far from clear, say analysts polled by Bloomberg.

According to an average estimate of 17 respondents, the probability of the return of sanctions, as a result of which the export of oil of the third largest OPEC producer in the next six months can be limited to 800 thousand barrels per day, is 50%.

This threat will weigh on the Friday meeting of OPEC countries and the organization’s allies in Jeddah, Saudi Arabia, where they will discuss the progress in reducing oil production.

Options for possible actions Trump, as well as the reactions of other countries, a lot.

The White House can restore sanctions lifted in the framework of the international nuclear deal, during the discussion of the issue on May 12, but can also mitigate or even tighten the sanctions regime.

Citigroup notes: “The fact that there have been personnel changes in the White House and in the State Department increases the likelihood of sanctions, which will have a slight impact on prices in Quarters III and IV at the level of a couple of dollars.” The likelihood that this will or will not happen in May, is approximately the same. ”

“I would not say that this is bound to happen, but the probability is very high, especially after the recent tightening of US sanctions against Russian companies,” says Ed Morse, chief commodities analyst at JPMorgan. “We average oil for $ 75 in the second quarter, but the maximum forecast is $ 80. In case of aggravation of tension around Iran, prices are likely to move to these levels.”

“The probability is certainly much higher than 50%: this event is more likely to happen than not,” says Abhishek Deshpande, head of the oil markets analysis team at RBC Capital Markets. “This reinforces the rationale for finding Brent above $ 70. Under Bolton (US President’s Assistant for National security – ed.), I think the discussion of the sanctions will not be limited – do we start thinking about changing the regime in Iran?”

If the sanctions are restored, 180 days will be allocated to the curtailment of operations related to Iran, follows from the documents of the Ministry of Finance of the United States.

After this period, the restrictive measures canceled in the framework of the nuclear settlement with Iran will be restored, including the requirement to countries to substantially reduce purchases from Iran.