Published: Wed, May 16, 2018
Business | By Tara Barton

John Bolton says sanctions 'possible' for European companies operating in Iran

John Bolton says sanctions 'possible' for European companies operating in Iran

Iran produces about 4% of the world's oil.

Germany acknowledged it could be hard to protect companies doing business with Iran as a senior USA official renewed a threat of sanctions against European firms following Washington's decision to pull out of a nuclear deal with Tehran.

Mr. Bolton's comments are the latest salvo in the Trump administration's campaign to put economic pressure on Iran and America's European allies to accept a new agreement that would impose tougher restrictions on the Iran's nuclear activities, constrain its missile program and roll back its support for militant groups. The key question is how much of Iran's one million oil barrels per day will be taken off the market with Iran sanctions? The bank's analysts wrote that collapsing oil production in Venezuela and potential export disruptions in Iran could push the price of Brent crude as high as Dollars 100 per barrel in 2019.

Trump telegraphed the move, and oil prices shot up in recent weeks as traders anticipated it. Crude has topped $78 a barrel, the highest since 2014, following Trump's sanctions announcement.

Higher oil prices boost the USA economy and employment and increase taxes the federal government collects, according to Zanganeh.

Israel and Iran engaged in an extensive military exchange on the heels of Trump's decision to leave the deal.

Gasoline futures fell 0.12% to $2.1864 a gallon.

In fact, the worry that the increase in oil prices could lead to higher inflation has impacted the Treasury yields.

As a private citizen, Bolton in the past has suggested that the USA push for a change in Iran's government.

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With the world in a "state of chaos", she said the European Union needs to control tensions by preserving the Iran deal. He added that this would be followed by sanctions on the oil-rich Middle East trading hub.

Trump's decision to leave the Joint Comprehensive Plan of Action was met with widespread criticism, save for US allies in Israel and Saudi Arabia, the regional arch foe of Iran and de facto head of OPEC. It's not clear when an attack could come, nor what form it could take. On January 16, 2016, the parties to the deal announced beginning of its implementation.

But that's exactly what Iran Oil Minister Bijan Namdar Zanganeh said on state television Thursday.

According to Reuters, Asian refineries have already started preparing themselves for replacing Iranian crude.

Fundamentally, they acknowledge, most businesses have ties to the USA that dwarf new revenue to be won from plunging into the Iranian market. That figure rises to less than 500,000 barrels per day after six months.

"These sanctions do impact all the major industries (in Iran)". Added to Opec's supply cuts and a determined reduction in output from Saudi Arabia, and it appears that the upward drivers are gaining ground.

"In short, the micro drivers of the oil market remain positive, as long as global demand does not suffer from the ongoing threats of trade wars and policy uncertainty", Blanch said. In fact, the Energy Information Administration lifted its 2019 domestic output forecast on Tuesday by almost 4% to a record 11.9 million barrels per day.

"It's extremely difficult-if not impossible-to imagine how you can enter into a new negotiating phase with the starting point of dismantling what you have achieved after 12 years of hard negotiations", Ms. Mogherini said Friday. New pipelines are in the works, but won't be ready until later next year.

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