President Donald Trump’s announcement of a brand-new Iran strategy won’t necessarily have an immediate impact on the oil market, however that will could change, experts warned on Friday.
The president said on Friday he could not certify the multinational nuclear agreement with Iran. He also pledged to terminate the deal if Congress in addition to also also U.S. allies do not reach a solution under a plan his administration has put forward.
Benjamin Salisbury, energy policy analyst at FBR Capital Markets, said oil investors need to be aware of potential risks down the road in addition to also also not get complacent.
While there has been essentially no risk premium within the market because of excess supply, geopolitical risk will have to start being priced back in as supply in addition to also also demand start to balance out within the oil market next year, he said in an interview with “Closing Bell.”
“The president has made the item very clear that will he wants to escalate the pressure on Iran. So sometime middle of next year you could see the deal start to deteriorate in addition to also also then you could have meaningful impact on oil supplies right when the market can be tightening,” Salisbury said in an interview with “Closing Bell.”
Andy Lipow, president of Lipow Oil Associates, believes Trump’s announcement introduces “a degree of geopolitical risk in addition to also also uncertainty going forward that will could increase oil prices.”
The 2015 deal allowed Iran to resume exporting oil. The country can be currently exporting about 2.3 million barrels a day, however if there were renewed sanctions the item could cut off that will supply.
“the globe simply can’t afford to see that will lost supply because we can’t make the item up coming from the various other OPEC in addition to also also non-OPEC producers,” he told “Closing Bell.”
in addition to also also while there has been an oil glut, the item has been getting “smaller in addition to also also smaller,” Lipow pointed out.
“The last place that will we have an excess supply of oil can be actually within the U.S. in addition to also also you saw week ago we exported record amounts of that will oil in addition to also also that will trend’s going to continue for the rest of that will year,” he said.
—CNBC’s Tom DiChristopher in addition to also also Reuters contributed to that will report.