Oil hits highest since 2014 after US pulls out of Iran nuclear deal

Crude oil prices rallied on Wednesday, hitting the highest level since 2014, after President Donald Trump pulled the US out of the Iran sanction deal.

Global benchmark Brent crude was last up 2.5 percent at $76.7 per barrel (bbl) while US West Texas Intermediate (WTI) crude rose 2.3 percent to 70.66/bbl.

Trump on Tuesday abandoned the international nuclear deal with Iran, agreed on in 2015, raising the possibility of slowing down supply from the OPEC state.

The US President has also given its allies 180 days to remove themselves from Iranian oil deals.

The US sanctions against Tehran go into place immediately, US Treasury Secretary Steven Mnuchin said after the announcement by President Trump.

Oil market’s focus will now shift to Iran and Europe’s reaction to the US move.

“What it (oil) does next depends on the other countries,” said Fawad Razaqzada, market analyst at Forex.com. “If they also exit the deal then this would be bullish for oil as Iranian oil exports will shrink again.”

He added that some countries might look to find a way around the situation that will allow them to continue purchasing Iranian oil, except the US.

“Consequently, we may actually see oil prices drop, perhaps after an initial pop higher,” Razaqzada said.

“I reckon Brent oil will probably go as high as $77.00-$77.50 before potentially heading lower again,” he added.

Write to Nadeshda Zareen at nadeshda.zareen@argaamplus.com