The decision of President Donald Trump to officially pulled out of the 2015 Iranian deal signed by the then U.S. president, Barack Obama and global powers bolstered crude oil prices during Asian trading session.
The Brent crude oil, against which Nigeria’s crude oil is priced, rose above the $76 a barrel as at 2 am Nigerian time to a four-year high of $76.71 a barrel.
The U.S. West Texas Intermediate surged by 1.4 percent to $70.7, also its highest in four years.
U.S. President Donald Trump had on Tuesday announced in a much-awaited speech that he will withdraw the US from the nuclear agreement with Iran, calling it ‘decaying and rotten.’ The president said he would reimpose economic sanctions that were waived when the deal was signed in 2015. Putting the nation against its European allies, whose leaders had tried to convince the President on the significance of the deal.
In response, Iran’s President Hassan Rouhani said: “The US has announced that it doesn’t respect its commitments.” Once again highlighting the danger of the pullout on the proposed North Korean meeting between the U.S. and the isolated nation.
According to former President Barack Obama in a Facebook post, “Walking away from the Joint Comprehensive Plan of Action (JCPOA) turns our back on America’s closest allies, and an agreement that our country’s leading diplomats, scientists, and intelligence professionals negotiated.
“At a time when we are all rooting for diplomacy with North Korea to succeed, walking away from the JCPOA risks losing a deal that accomplishes – with Iran – the very outcome that we are pursuing with the North Koreans,” he said.
Antonio Guterres, United Nations secretary general said the announcement ‘deeply concerned’ and called on the other nations involved in the deal to abide by their commitments.
U.S. key allies in Europe, U.K., Germany, and France said they ‘regret’ U.S decision but look to make the deal work regardless.
In not so surprising fashion, Israel’s Prime Minister Benjamin Netanyahu loud his support for Mr Trump’s “bold” withdrawal from a “disastrous” agreement.
While Iran’s middle East rival, Saudi Arabia, says it “supports and welcomes” Mr Trump’s moves towards pulling out of the deal.
Experts believed the deal may further hurt global oil supplies and boost oil price towards the $80 a barrel resistance level.
But volatility is expected across the oil market as allies look to fashion out a way to abide by their agreements with Iran while at the same time maintaining their U.S relationships. Market uncertainty is expected to remain high ahead of a possible meeting between the U.S. and North Korea and the review of the U.S – China trade discussions of May 5th.
“The continuous rise in global oil prices will boost Nigeria’s foreign revenue ahead of the national election and deepen economic activities across key sectors,” Samed Olukoya, a foreign exchange research analyst at Investors King Ltd. “The inflation rate is projected to moderate further, however, new job creation remained weak with the unemployment rate at 18.8 percent.”