Commodities: US pulls out of Iran nuclear deal

US President Donald Trump has announced he is pulling his country from the so-called Iran nuclear deal.

Speaking from the White House, Trump said that, "a constructive deal could easily have been struck at the time. But it wasn't. At the heart of the Iran deal was a giant fiction that a murderous regime desired only a peaceful nuclear energy programme."

"We will be instituting the highest level of economic sanction [...] The United States no longer makes empty threats," he added.

In response, Iranian president Hassan Rouhani reportedly emphasised the multilateral accord, known as the Joint Comprehensive Plan of Action, was not a bilateral one between Washington and Tehran but rather a multilateral one, endorsed by the United Nations's Security Council.

Significantly, Iran reportedly also said it would remain within the deal.

Possibly related to the above, according to Thomas Pugh at Capital Economics, that might lead the European Union to deem it unnecessary to reinstate its own sanctions against shipping insurance.

Those, Pugh said, had been "crucial" in disrupting the country's oil exports the last time around.

According to Pugh, under such a scenario "The impact on oil supply could be relatively small as Iran would still be able to export oil to countries less concerned about US sanctions, especially in Asia."

However, some observers believed that eventually the US sanctions would force European companies to stop their dealings with Tehran.

Following Trump's announcement, the US Treasury said companies would have between 90 and 180 days to 'wind-down' their activities with Iran.

Commenting on Wednesday's announcement, Gregory Daco at Capital Economics said: "If WTI crude oil price average $70 per barrel this year, the US economy could suffer a drag worth half of the 0.7ppt fiscal stimulus boost from the Tax Cuts and Jobs Act and Bipartisan Budget Act. Stronger energy investment would provide an offset, but elevated shale oil productivity (which had doubled - if not tripled - since 2014) would limit the upside."

As of 2041 BST, front month Brent crude oil futures were down by 0.741% at $75.61 a barrel on NYMEX, but well off the session lows plumbed before the announcement.