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Oil Prices Surge After Trump Removes US from Iran Deal; US Dollar Supported by Rising Bond Yields

Published May 9, 2018
  • US President Donald Trump officially withdrew from the 2015 Iran nuclear deal which aimed to deny Tehran the ability to build nuclear weapons; during yesterday’s televised announcement, Trump pledged to reinstate economic sanctions against the Iranians.
  • The US withdrawal from the Iran deal will commence over a 6-month period, allowing oil markets and other major stakeholders to prepare; other international agreements such as the Trans-Pacific Partnership and the Paris Climate Accord have continued without US support, however, it remains to be seen if the EU can independently keep this deal alive with Iran.
  • Oil prices initially slid yesterday but have since recovered with a near 3 percent surge in prices this morning; the commodity’s value is topping 2014 highs as analysts expect Iran to face great difficulties in exporting their oil in light of strong economic sanctions from the US.
  • Analysts will also look to the release of US Energy Information Administration’s weekly data on US oil supplies at 10:30 AM EST. Other data of note includes US purchasing price indices and Canadian month-on-month growth for new building permits.
  • The US dollar remains strong this morning as US bond yields continue to rise, indicating strengthening inflation prospects for the US economy. US stocks are pointing to a higher open this morning as markets continue to assess the ongoing impacts of Trump’s Iran decision.