Trading Trump’s Iran decision
Oil is slippery – so is Trump. But how can you take advantage of uncertainty over the Iran nuclear deal to trade the oil markets?
Markets are on tenterhooks today, Tuesday 8 May, ahead of Donald Trump’s decision on whether to scrap the nuclear deal with Iran.
The president tweeted on Monday night that he would reveal his decision at 2pm (7pm BST) on Tuesday, well before his self-imposed deadline of Saturday.
He’s expected to withdraw the US from the Iran nuclear deal, which could disrupt global oil supply – so the oil markets will likely show the most dramatic reaction to his decision, although the event is also affecting forex and stock markets.
On Monday, WTI crude broke above $70 a barrel to its highest level since late-2014. If Trump pulls out of the deal and re-starts US sanctions on Iran, oil is likely to keep rising as it will mean Iran’s output is slashed and the market could lose around one million barrels of oil a day.
But Trump is notoriously difficult to read. China, Russia, Germany, France and Britain have also all urged him not to renege on the deal.
So Trump may decide to pull out of the deal, but still allow these countries to deal to keep trading with Iran. The president has also long complained about high oil prices and has accused OPEC of ‘artificially’ boosting them. Will he still be willing to pull out of the Iran deal in the knowledge that the move will likely continue inflating oil prices?
If Trump throws the markets any kind of curveball we could witness a sharp sell-off in oil and energy sector stocks.
But both Brent and WTI crude oil prices have dropped in trading so far today in a sign that traders may well be profit-taking in a ‘buy the rumour sell the fact’ style sell-off.
Find out more about TRADING THE OIL MARKETS in our free webinar with pro trader Steve Ruffley, on Thursday 10 May at 8pm (UK time). Click here for free registration.
You should under no circumstances consider the information and comments provided in this article as an offer or solicitation to invest. This is not investment advice. The information provided is believed to be accurate at the date the information is produced.