NEW YORK – Investors are raising concerns that Washington’s decision to exit the 2015 Iran nuclear deal could destabilize the effort by major oil producers to eliminate global supply and balance the market for crude.
Iran is a member of the Organization of the Petroleum Exporting Countries, which together with its external allies including Russia has been spearheading an effort since 2016 to reduce global output by about 2 percent.
“If the reimposition of US sanctions on Iran leads to a reduction in Iran’s oil output and exports, OPEC and its allies could exit the deal at the end of the year or even sooner in order to prevent a supply shortage in the oil market,” said Thomas Pugh, commodities economist at Capital Economics.
The oil cartel and its partners are set to meet in June to decide whether they’ll extend the deal beyond this year.
If United States sanctions take Iranian oil off the market, leading to further price gains, some signatories may declare their mission accomplished.
Meanwhile, oil prices hit 3½-year highs this week amid expectations that renewed US economic sanctions will squeeze Iran’s oil supply.
Brent crude, the global benchmark, was down 0.05 percent at $77.42 a barrel on London’s Intercontinental Exchange.
On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.11 percent at $71.44 a barrel.