US exits from Iran nuclear deal – Danske Bank

Tonight, US President Trump announced that US will withdraw from the Iran nuclear deal from 2015 as he argued that evidence presented by Israel last week helped his decision, notes Senior Analyst, Jens Nærvig Pedersen at Danske Bank.

Key Quotes

“He also said that the US will reinstate the highest level of economic sanctions on Iran and that he will work with US allies to prevent Iran from developing nuclear weapons. In this regard he noted that he is willing to negotiate a deal with Iran.”

“Iranian President Rouhani responded that Iran intends to stick to the agreement and wants to cooperate with the remaining five countries in the deal, namely China, Russia, the UK, France and Germany.”

“For the world economy and markets it is important whether this step will affect Iran’s oil exports. Here it is worth noting that US does not import oil from Iran. Iran’s main export markets are the EU, India, China, Japan and South Korea. At the time of writing it is unclear what the response from e.g. EU will be to this move and hence whether Iran’s oil exports will be affected.”

“Muted market reaction

The market reaction to the announcement from the US was overall muted. The oil price initially rose with Brent crude rising USD1/bbl and above USD75/bbl. The gold price edged slightly higher, while the reaction in equity markets and in the broad USD exchange rate was limited. Oil-sensitive currencies broadly mirrored the move in oil markets.”