Tehran: Oil prices surged more than two percent in Asia on Wednesday after Donald Trump pulled the United States out of the Iran nuclear deal, fuelling fresh geopolitical uncertainty.
Both main crude contracts have been rising in recent weeks to reach three-and-half-year highs on expectations the president would withdraw from the 2015 pact, which opened up Tehran’s atomic programme in return for an easing of sanctions.
In an address Tuesday he said he would pull out of the accord — which was agreed by Britain, China, Germany, Russia and the Obama administration — calling it “defective at its core”.
Iran’s President Hassan Rouhani said the country could now resume uranium enrichment “without limit” but would discuss its response with the other signatories before making a decision.
With the move already priced into markets, WTI and Brent sank soon after the announcement with some commentators suggesting Trump could still pedal back on some of his rhetoric and shift to a more diplomatic tone.
However, they bounced back strongly in Asia and there is talk crude could continue rising to $80 a barrel, with gains helped by uncertainty in oil-rich Venezuela, the OPEC-Russia output cap, improving global demand and data pointing to a drop in US stockpiles.
“Given the unilateral move by the US, much of the movement on oil prices had been factored in,” said Stephen Innes, head of Asia-Pacific trade at OANDA.