Oil Declines After Iran Nuclear Deal Signed. Who Is Going to Win and Lose?

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Iran Nuclear Deal SignedCrude Oil WTI August 2015 contract or CLQ15 is down -0.88 (-1.69%) to $51.32 per barrel today. Clearly for now, the deal is net negative for crude oil. But Iran was able to sell most of its oil to Asia even with the sanctions on, so we are not sure that 1 million barrels will really hit the market. We believe that it was just selling it cheaper to countries that don’t respect the UN sanctions.

Russia is going to lose as Iran might not need to spend as much as before on S300 defense systems and other protective capabilities. It could increase the supply of energy to the markets, in case we are wrong about our assessment on the oil supply situation. Still, we think that stable Iran is good for Russia and the world, and the deal is very positive. Russia also contributed a lot to the deal, expecting the US and the US President Barack Obama to keep its promise and abandon Europe AMD plans after the Iran deal. We will have to wait to see if this will happen.

Moscow hopes the US will fulfill its promise not to develop a system of missile defense in Europe after a deal with Iran has been reached, Russian Foreign Minister Sergey Lavrov said in Vienna today.

“We all probably remember that in April 2009 in Prague [US] President [Barack] Obama said that if the Iran nuclear program issue is sorted out, then the task of creating the European segment of the missile defense system will disappear,” Lavrov said at press conference in Vienna.

Turkish foreign minister: Iran deal ‘great news’ for Turkish economy. The deal is a “great news” for the Turkish economy as it is likely to boost bilateral trade, Turkish Finance Minister Mehmet Simsek said on Tuesday.

Here are some of the deal highlight bullets from Reuters and Bloomberg:

  • Iran ballistic missile embargo seen in place for 8 years
  • Conventional weapon embargo seen in place for 5 years
  • Iran to cut 98% of enriched uranium stockpile under deal
  • Iran will eliminate two-thirds of centrifuges under deal
  • EU to lift sanctions on Iran as it meets nuclear obligations
  • Iran deal implementation will take months, officials say
  • Iran won’t receive sanctions relief until it complies with terms of agreement

The deal is also good for Iran as it will help boost the economy. It wasn’t the oil sanctions that hurt so much but the SWIFT and banking restrictions. We believe that Iran signed a good deal and this is much better for the country.

Raoul Pal the Founder ofGlobal Macro Investor and Real Vision Television is very optimistic about Iran. Today he tweeted: Iran is going to be the single best inv opportunity for the next decade. Economy was paused in 1980 and will catch up 35 years in < 10. He shared that there are a few funds that investors can use and initially investors will enter via private equity because firms are cash starved and borrow at 20% plus rates, then investing in equity index will be good.

Paoul likes Iran because of its big population, has very young population as well as high savings ratios – 25-35% in many cases, virtually no household debt and the government debt is just about 10%.

“Iran nuclear deal is a great news for the Turkish economy,” he wrote in English on his official Twitter account. “It’s likely to boost trade and investments between the two countries.”

As reported by Zerohedge:

At the heart of the agreement between Iran and the six powers—the U.S., U.K., Russia, China, Germany and France—is Tehran’s acceptance of strict limits on its nuclear activities for 10 years. These are supposed to ensure that the country remains a minimum of 12 months away from amassing enough nuclear fuel for a bomb. After the 10-year period, those constraints will ease in the subsequent five years.

In exchange, the U.S., the European Union and the United Nations will lift tight international sanctions on Tehran, a move that Western diplomats say could help Iran’s economy to expand by 7% to 8% annually for years to come.

Of course, all this if the Congress doesn’t block this deal.

The full text:

Nuclear Deal Text leaked by Iran’s Tabnak news site.

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