After Trump rips up Iran deal, where next for the oil price?

There are also questions about supply dynamics with traders suggesting that US shale could fill any gap left by Iran, thereby dampening price inflation. (Getty Images)
Updated 10 May 2018
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After Trump rips up Iran deal, where next for the oil price?

  • Saudi Arabia has announced it will take steps to prevent crude supply shortage
  • The global reach of the US should not be underestimated, and companies’ concerns of running foul of sanctions are very real, says energy analyst John Rigby.

LONDON:  The oil price hit about $77 per barrel, up almost 3 percent on the day — its highest since November 2014  and almost $10 higher than a month ago — as markets reacted to US President Donald Trump’s decision to re-impose sanctions on Tehran.

Benchmark Brent crude has been on an upward trajectory for several weeks as speculation mounted that Trump would terminate the landmark 2015 accord that resulted in a lifting of US and EU sanctions in return for a halt to Iran’s nuclear weapons program.

Trump has broken with his European allies who continue to support the agreement, but precisely what punitive measures the Americans will take against EU countries that continue to import Tehran’s oil is less than clear.  

Jon Rigby, an energy analyst at UBS in London, said: “The global reach of the US should not be underestimated, and companies’ concerns of running foul of sanctions are very real. 

“As such, a material decline in Iranian oil production may not be the immediate result, but a significant obstacle to further expansion seems a likely outcome.” 

Trump has indicated “waivers” for those countries and companies that significantly cut their dependence on Iranian crude, but by how much and how long they have to comply before they find themselves on the receiving end of punitive measures from Washington remains uncertain.

Looking at the future direction of the oil price, Ken Odeluga, a market analyst at City Index in London said: “Probabilities will continue to point Brent crude oil futures to $80. (But a number of factors) strongly advise against attempts to chase oil above $80 in a straight line.” 

UBS said: “The presence of political risk in oil prices is ‘situation normal’ and we’d argue the past 2-3 years where it has not obviously been an influence are the outlier.” 

Richard Robinson, manager of the Ashburton Global Energy Fund said the worst-case scenario, involving strict adherence to and policing of sanctions, could see as much as 700,000 barrels per day (bpd) removed from the market. A less disciplined approach, with ambiguous US guidance, could remove less than 200,000 bpd, he suggested. 

“Europe currently imports between 500-600,000 bpd of Iranian crude and it is expected this number will drop by approximately 60 percent,” said Robinson. 

Iranian barrels can be easily substituted for Iraqi crudes, he added.

There are also questions about supply dynamics, with traders suggesting that US shale could fill any gap left by Iran, thereby dampening price inflation. 

Late Tuesday, the US Energy Information Administration said US crude output could reach 12 million bpd by the fourth quarter of 2019, nearly 500,000 bpd above previous estimates. 

Saudi Arabia, the world’s largest oil exporter, has said it will take all necessary measures to prevent supply shortages following the US withdrawal from the Iran nuclear deal. “The Kingdom will work with major oil producers within and outside OPEC, and with major consumers as well to limit the impact of any shortages in supplies,” the Saudi Energy Ministry said on Wednesday.

A number of energy deals are up in the air. Late last year, BP agreed to sell three North Sea gas fields to Iran’s Serica Energy for $400 million, but it is now unclear whether that will go ahead. Total signed a deal with Tehran in July 2017 to develop phase 11 of Iran’s South Pars field with an initial investment of $1 billion, marking the first major Western energy investment in Iran since the lifting of sanctions. That arrangement is expected to unravel, with Reuters reporting a Chinese company could step in as a substitute for the French giant.

Outside energy, Boeing and Airbus will lose contracts worth $39 billion to replenish Iran’s fleet of commercial planes, according to Steven Mnuchin, US treasury secretary. 

Monica Malik, the chief economist at Abu Dhabi Commercial Bank, said: “We believe that the main potential impact on Iranian oil exports will come from sanctions on foreign banks transacting with the Central Bank of Iran. US exemptions will only be given to countries that substantially reduce their imports of Iranian crude.” 

However, Malik believes the unilateral decision by the US should result in a more contained reduction of Iranian exports than that seen in 2012-2015, when an EU oil import ban was also in place. 

US crude imports from Iran are negligible; Asian and European countries are the main purchasers. 

Malik said: “We see China and India still potentially importing Iranian crude, as was the case during the previous sanctions period. Iran is expected to offer considerable price discounts to encourage China and India to import its crude.”

Thus, the market is currently forecasting a more contained fall in Iranian crude exports in the range of 300-500,000 bpd — much less than the 1.2 million bpd cuts seen in mid-2013,” she said.

Robinson pointed to a rise in geopolitical tension and hence risk. “The Iranian regime must either focus its holed budget domestically, to emphasize survival, handing over regional influence to the Saudis. If it continues to spend on regional conflicts, it risks another revolution at home,” he said.

Meanwhile, there are question marks over whether the current output agreement between OPEC and its allies to keep a lid on production will hold. 

Not only will there be dwindling supplies from Iran, but also a supply slump from crisis-ridden Venezuela, where production has fallen more precipitously than anyone anticipated, said the International Energy Agency.

Nevertheless, Trump has left several doors open for continued dialogue between the US and Iran. Co-signatories to the nuclear accord can continue discussions on their own, and the Europeans were welcome to discuss the implementation of sanctions with Trump’s power brokers in the White House, according to American media.


UK Supreme Court to rule on landmark legal challenge over legal definition of a woman

Updated 54 min 4 sec ago
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UK Supreme Court to rule on landmark legal challenge over legal definition of a woman

  • Britain’s highest court scheduled to rule whether a transgender person with a certificate that recognizes them as female can be regarded as a woman under equality laws

LONDON: The UK Supreme Court is poised to rule Wednesday in a legal challenge focusing on the definition of a woman in a long-running dispute between a women’s rights group and the Scottish government.
Five judges at Britain’s highest court are scheduled to rule whether a transgender person with a certificate that recognizes them as female can be regarded as a woman under equality laws.
While the case centers on Scottish law, the group bringing the challenge, For Women Scotland (FWS), has said its outcomes could have UK-wide consequences for sex-based rights as well as everyday single-sex services such as toilets and hospital wards.
What’s the case about?
The case stems from a 2018 law passed by the Scottish Parliament stating that there should be a 50 percent female representation on the boards of Scottish public bodies. That law included transgender women in its definition of women.
The women’s rights group successfully challenged that law, arguing that its redefinition of “woman” went beyond parliament’s powers.
Scottish officials then issued guidance stating that the definition of “woman” included a transgender woman with a gender recognition certificate.
FWS sought to overturn that.
“Not tying the definition of sex to its ordinary meaning means that public boards could conceivably comprise of 50 percent men, and 50 percent men with certificates, yet still lawfully meet the targets for female representation,” the group’s director Trina Budge said.
The challenge was rejected by a court in 2022, but the group was granted permission last year to take its case to the Supreme Court.
What are the arguments?
Aidan O’Neill, a lawyer for FWS, told the Supreme Court judges – three men and two women – that under the Equality Act “sex” should refer to biological sex and as understood “in ordinary, everyday language.”
“Our position is your sex, whether you are a man or a woman or a girl or a boy is determined from conception in utero, even before one’s birth, by one’s body,” he said on Tuesday. “It is an expression of one’s bodily reality. It is an immutable biological state.”
The women’s rights group counts among its supporters author J.K. Rowling, who reportedly donated tens of thousands of pounds to back its work. The “Harry Potter” writer has been vocal in arguing that the rights for trans women should not come at the expense of those who are born biologically female.
Opponents, including Amnesty International, said excluding transgender people from sex discrimination protections conflicts with human rights.
Amnesty submitted a brief in court saying it was concerned about the deterioration of the rights for trans people in the UK and abroad.
“A blanket policy of barring trans women from single-sex services is not a proportionate means to achieve a legitimate aim,” the human rights group said.


Canadian university teachers warned against traveling to the United States

Updated 16 April 2025
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Canadian university teachers warned against traveling to the United States

  • The Canadian government recently updated its US travel advisory, warning residents they may face scrutiny from border guards and the possibility of detention if denied entry

HALIFAX, Nova Scotia: The association that represents academic staff at Canadian universities is warning its members against non-essential travel to the United States.
The Canadian Association of University Teachers released updated travel advice Tuesday due to the “political landscape” created by President Donald Trump’s administration and reports of some Canadians encountering difficulties crossing the border.
The association says academics who are from countries that have tense diplomatic relations with the United States, or who have themselves expressed negative views about the Trump administration, should be particularly cautious about US travel.
Its warning is particularly targeted to academics who identify as transgender or “whose research could be seen as being at odds with the position of the current US administration.”
In addition, the association says academics should carefully consider what information they have, or need to have, on their electronic devices when crossing the border, and take actions to protect sensitive information.
Reports of foreigners being sent to detention or processing centers for more than seven days, including Canadian Jasmine Mooney, a pair of German tourists, and a backpacker from Wales, have been making headlines since Trump took office in January.
The Canadian government recently updated its US travel advisory, warning residents they may face scrutiny from border guards and the possibility of detention if denied entry.
Crossings from Canada into the United States dropped by about 32 percent, or by 864,000 travelers, in March compared to the same month a year ago, according to data from US Customs and Border Protection. Many Canadians are furious about Trump’s annexation threats and trade war but also worried about entering the US
David Robinson, executive director of the university teachers association, said that the warning is the first time his group has advised against non-essential US travel in the 11 years he’s worked with them.
“It’s clear there’s been heightened scrutiny of people entering the United States, and … a heightened kind of political screening of people entering the country,” said Robinson, whose association represents 70,000 teachers, librarians, researchers, general staff and other academic professionals at 122 universities and colleges.
Robinson said the group made the decision after taking legal advice in recent weeks. He said lawyers told them that US border searches can compromise confidential information obtained by academics during their research.
He said the association will keep the warning in place until it sees “the end of political screening, and there is more respect for confidential information on electronic devices.”

 


Afghan children will die because of US funding cuts, aid official says

Updated 16 April 2025
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Afghan children will die because of US funding cuts, aid official says

  • More than 3.5 million children in Afghanistan will suffer from acute malnutrition this year, an increase of 20 percent from 2024

Afghan children will die because of US funding cuts, an aid agency official said Tuesday.
The warning follows the cancelation of foreign aid contracts by President Donald Trump’s administration, including to Afghanistan where more than half of the population needs humanitarian assistance to survive.
Action Against Hunger initially stopped all US-funded activities in March after the money dried up suddenly. But it kept the most critical services going in northeastern Badakhshan province and the capital Kabul through its own budget, a measure that stopped this month.
Its therapeutic feeding unit in Kabul is empty and closing this week. There are no patients, and staff contracts are ending because of the US funding cuts.
“If we don’t treat children with acute malnutrition there is a very high risk of (them) dying,” Action Against Hunger’s country director, Cobi Rietveld, told The Associated Press. “No child should die because of malnutrition. If we don’t fight hunger, people will die of hunger. If they don’t get medical care, there is a high risk of dying. They don’t get medical care, they die.”
More than 3.5 million children in Afghanistan will suffer from acute malnutrition this year, an increase of 20 percent from 2024. Decades of conflict — including the 20-year US war with the Taliban — as well as entrenched poverty and climate shocks have contributed to the country’s humanitarian crisis.
Last year, the United States provided 43 percent of all international humanitarian funding to Afghanistan.
Rietveld said there were other nongovernmental organizations dealing with funding cuts to Afghanistan. “So when we cut the funding, there will be more children who are going to die of malnutrition.”
The children who came to the feeding unit often could not walk or even crawl. Sometimes they were unable to eat because they didn’t have the energy. All the services were provided free of charge, including three meals a day.
Rietveld said children would need to be referred to other places, where there was less capacity and technical knowledge.
Dr. Abdul Hamid Salehi said Afghan mothers were facing a crisis. Poverty levels among families meant it was impossible to treat severely malnourished children in private clinics.
“People used to come to us in large numbers, and they are still hoping and waiting for this funding to be found again or for someone to sponsor us so that we can resume our work and start serving patients once more.”


Magnitude 5.6 earthquake strikes Hindu Kush region, Afghanistan, EMSC says

Updated 16 April 2025
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Magnitude 5.6 earthquake strikes Hindu Kush region, Afghanistan, EMSC says

  • EMSC first reported the quake at a magnitude of 6.4

KABUL: An earthquake of magnitude 5.6 struck the Hindu Kush region in Afghanistan on Wednesday, the European-Mediterranean Seismological Center (EMSC) said.
The quake was at a depth of 121 km (75 miles), EMSC said, and the epicenter 164 km east of Baghlan, a city with a population of about 108,000.
EMSC first reported the quake at a magnitude of 6.4.

 


US plans to use tariff negotiations to isolate China, WSJ reports

Updated 16 April 2025
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US plans to use tariff negotiations to isolate China, WSJ reports

  • US officials plan to use negotiations with more than 70 nations to ask them to disallow China to ship goods through their countries and prevent Chinese firms from being located in their territories to avoid US tariffs

WASHINGTON: US President Donald Trump administration plans to use ongoing tariff negotiations to pressure US trading partners to limit their dealings with China, The Wall Street Journal reported on Tuesday citing people with knowledge of the conversations.
US officials plan to use negotiations with more than 70 nations to ask them to disallow China to ship goods through their countries and prevent Chinese firms from being located in their territories to avoid US tariffs, the report added.