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Will Trump break down oil?
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Loading...Like any other well-run rhetoric politician, Donald Trump also has his own teller, especially when he is excited about some of the themes. Those who follow his speeches or Twitter scriptures will see that he quite often uses the words "really," "truth," and "bad," especially when he talks about "getting a quick bargain".
Speaking skills of the president have come back to the issue with Iran again. Trump insists he claims he does not want a change in the country's regime but a non-nuclear weapon while he remains open for negotiations. "I really think Iran would like to make a deal, I think it's going to be a wise decision, and it's an opportunity to happen." - announced the president at his press conference.
But the fact that Iran has no intention of negotiating with Trump seems to be of less importance.
The change in the mood of Trump over Iran is really worrying about the rest of the world, but nowhere else will be felt the new crisis of confidence in the oil market.
This is because the so-called a "geopolitical benefit" from tensions in the Middle East has given oil a significant force over the last two months, which has only happened because of the conflict between the two countries and the sanctions imposed.
In addition to cutting production from the OPEC and sanctions on Venezuela, the situation with Iran provides the only major oil support at the moment. Especially in the worsening of trade relations between the US and China, which triggered fears for the world economy. Without the necessary demand for oil, supply reduction will be the only way to maintain the balance of the market - that is, higher prices in the language of OPEC.
Most, Trump wants the guarantee that Iran does not make nuclear weapons, as the Rouhani Administration says. But she will not give Trump the satisfaction he wants - a bargaining court. At least until the sanctions are still imposed, so Trump does not have any reason to impose any new restrictions.
If Trump even proposes a temporary reduction in sanctions on Iranian oil to lure Tehran to negotiate, it will be a real nightmare for bulls. The price will most likely collapse for both WTI and BRENT - despite OPEC mining restrictions. In such an environment, Saudis will lock in a situation of endless supply cuts to curb additional losses - especially with Russia, which refuses to observe OPEC norms for a long period of time.
Several things matter to the president, but they seem to be insignificant to the price of oil. He wants it to remain as low as possible, as long as possible to have good chances of re-election in November 2020. There is still time, but he will definitely try.
This may be one of the reasons why he is not in a hurry to make a deal with China. Such an agreement will push the oil up. Oil prices fell 7% last week when the conflict escalated.
The closer we are to a nuclear agreement with Iran that will give Tehran extra liberty on the oil market (albeit with minimal constraints), the more threatening it is for the oil price that can fall by as much as $ 5 a barrel or more .
But let's not rush to the conclusions. Political speculation may also be impossible. Iranian President Hassan Rouhani is not happy with Trump's policy compared to Obama's. Still, in its own style, Trump can invite Iran only to lower prices down.
While the Iranians seem to be shaken by Trump and his approach, Foreign Minister Javad Zarif said Trump has to prove his intentions with actions and not words.
For a president that stakes at low oil prices, a temporary relief of sanctions may "lie" the Iranians for some time. And the economic need can leave Iran with no choice but to sit on the table - as in 2015. And Trump can always impose new sanctions, as with China, if the negotiations do not go as he wants.
Photo: Flickr
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