Iran and the US violation of JCPOA


(Christopher) #1

The next few weeks should prove to be interesting owing to the US ‘withdrawal’ from the Joint Comprehensive Plan of Action.

Oil, currency and gold? may serve up some opportunities.

What are everybody’s thoughts?


(Vladislav Kozub) #2

Oil is already at its highest point since 2014. If they will confirm the withdrawal, it very well may go even up to $80.

The USD will presumably appreciate due to oil’s nature to be positively correlated with $, which means Freetrade better be up and running this week so that we could lock into the US market before the FX rates skyrocket!

Any other thoughts on potential benefits to the UK investors?


(Christopher) #3

@Vlad there could be some dents to the share prices of companies who announced deals as result of JCPOA which may present some buying opportunities, though I’d expect these to be modest. Boeing, Airbus likely to feel some impact - $40bn cancelled orders isn’t insignificant, especially down the supply chain, on the caveat that sanctions actually take hold.

Oil is a trickier subject. Personally I don’t think it’s inevitable for an oil price rise, despite the cronyism of the current US administration. The US has the production capacity (and then some) to fill any gaps left by potential sanctions, plus there’s significant margin in which US shale remains a profitable endeavour. The biggest impediment to US production is midstream development - they need bigger pipes, and more of them.

But any US exuberance to export oil needs to balanced with the need to support longterm ally KSA, with their costly program diversification of the economy and associated program of national reforms. KSA also has the ability to increase global production by 1.5-2%, more or less, on demand. Interestingly, Russia and KSA, both hit hard by falling oil prices, have been working hard to improve their ties and cooperation (collusion?) on oil, which during ‘regular service’ wouldn’t impress US policy makers. Will this new relationship also temper US oil exports, in order to keep KSA happy?

Here’s a list of businesses prequalified to tender projects in Iranian upstream development:

http://www.nioc.ir/Portal/File/ShowFile.aspx?ID=0b0b8c26-c6af-45f6-9aa3-a2995a7ac710

It might be interesting to watch the share price of those listed cos in relation to the confirmation of oil and gas specific sanctions.