A new deal between the United States and Iran may be on the horizon as US President Donald Trump just fired US National Security Advisor John Bolton-and oil prices are expected to take a turn for the worse.
"I informed John Bolton last night that his services are no longer needed at the White House. I disagreed strongly with many of his suggestions, as did others in the Administration, and therefore I asked John for his resignation, which was given to me this morning," Trump tweeted on Tuesday.
The move may go a long way to smoothing things out between Iran and the United States-a development that would have been hard to achieve with Bolton in office due to his persistent hardline stance against Iran.
The tensions between Iran and the United States has been played out most elaborately in the oil industry, fraught with oil tanker skirmishes that pulled in other US allies such as the UK. Gibraltar seized an Iranian oil tanker at the request of the United States after it suspected the tanker of carrying sanctioned Iranian oil to sanctioned Syria. Iran then seized a British tanker traveling through the Strait of Hormuz, claiming it had violated maritime laws.
Iran has threatened to close the Strait-the most important oil chokepoint in the world-on numerous occasions since the onset of sanctions, unnerving the oil industry.
While oil prices have weakened on demand fears due to the trade war between China and the United States, the tensions over Iranian oil have limited those losses. Now, with today's administration reshuffling signaling a warming up to Iran, those trade war fears will run unchecked.
Oil prices had been trading up earlier in the day as OPEC renewed its commitment to the production quotas, and suggesting that it might extend the cuts again. By 12:28pm, WTI started to fall, reaching $57.71 (0.24%), with expectations of gloomier prices to come.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More