As US Withdraws from JCPOA, European Reaction Remains Uncertain

As US Withdraws from JCPOA, European Reaction Remains Uncertain

As US Withdraws from JCPOA, European Reaction Remains Uncertain

Calling the JCPOA a "horrible, one-sided deal that should have never, ever been made", Trump announced that the United States would soon begin "reinstating us nuclear sanctions on the Iranian regime".

Instead Mr Trump will reinstate sanctions on Iran. Or rather they did, until Iranian President Hassan Rouhani announced that Iran has the ability to restart enriching uranium "without any limitations" in just a few weeks.

They now say they intend to negotiate with Iran to salvage what's left of the deal.

The U.S. plans to reintroduce sanctions against Iran, which pumps about 4% of the world's oil, after abandoning a deal reached in late 2015 that limited Tehran's nuclear ambitions in exchange for the removal of U.S. and European sanctions.

While the world waits to see what the European signatories of the JCPOA do in response to the American withdrawal, it also remains to be seen whether Iran will retaliate or try to keep the deal in force without the participation of the US.

While Iran saw a million bpd taken out of the market during the sanctions imposed between 2012-15, it is unlikely that fresh sanctions by the U.S. will result in a similar-sized cut this time, suggested Spencer Welch, oil markets and downstream director at London-based IHS Markit. "Iranians now experience the disturbing prospect of crippling inflation, budget cuts, delayed payments and shortages of basic goods, especially imported medication upon which many lives depend".

"As the author of the Iranian Leadership Asset Transparency Act - which passed the House with broad, bipartisan support a year ago - I am committed to protecting our homeland, exposing Iran's regime finances and terrorism ties, standing with our ally Israel, and keeping Americans safe". And it was in terms of "a bad deal" that Trump railed against the Joint Comprehensive Plan of Action (JCPOA) that Barack Obama signed up to in 2015.

"While I acknowledge this deal is neither comprehensive nor ideal, it has by all accounts effectively hindered Iran's ability to develop nuclear weapons in the near-term".

While Trump's move on Tuesday ratcheted up regional tensions and widened a rift with U.S. allies in Europe, no one is predicting an American invasion of Iran.

But then the shah was overthrown in 1979, and the USA stopped supplying Iran with highly enriched uranium.

That's where things get very complicated, because the Europeans in general have said they will stick with their end of the deal and continue trading with Iran.

Saving the accord would mean ensuring that Iran benefits economically from it, and that Iran continues to submit to intrusive inspections to ensure it is not developing nuclear weapons.

But officials are privately sceptical about how long it can survive, particularly if the United States imposes sanctions on European companies doing business in Iran. Rouhani believes, though, that the countries still in the deal could "save the pact".

"There is also a risk of $100/bbl, as our forward balances embed OPEC "tapering" and no major drop in Iranian crude exports", said Francisco Blanch, commodity and derivative strategist at the bank said in a report published Wednesday.

Israel said it had attacked almost all of Iran's military infrastructure in Syria yesterday after Iranian forces allegedly fired rockets at Israeli-held territory for the first time. This decision of the U.S. is a solo flight, reminiscent of France's foreign policy in the interwar years.

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