Tensions with Iran rise as U.S. imposes new sanctions
June 25th, 2019
There are a lot of headlines and comments about what’s happening in the Middle East. New sanctions on Iran, a visit to Saudi Arabia by Vice President Pence, Iran’s response to the US about sanctions and all other matters. The Middle East is always a wild card for the energy complex, but as all this rhetoric gets stirred up energy prices rallied higher and then eased off the highs just taking in all the possible outcomes that could impact prices. The market could get balled up here for a bit until one of these issues gets pushed.
The IEA’s Executive Director, Faith Briol, said the IEA is very concerned about the impact that tensions in the Middle East may have on global energy security and will act if there is any physical disruption to supplies.
US President Donald Trump signed an executive order that would impose fresh sanctions on Iran. Amid increased tensions between the two countries. Iran’s ambassador to the UN said the latest US sanctions against Iran showed that the US does not respect international law and called for dialogue on regional security.
US Secretary of State, Mike Pompeo, met with Saudi Arabia’s king and crown prince on Monday amid increased tensions with Iran after President Trump called off a military strike to retaliate for Iran’s downing of a US drone.
Saudi Arabia’s Minister of State for Foreign Affairs warned regional rival Iran there would be more sanctions if it continued its “aggressive policies”, but said Saudi Arabia wanted to avoid war.
The Kremlin’s spokesman, Dmitry Peskov, said new sanctions imposed by the US on Iran are Illegal. However, he declined to say what measures Russia might adopt to counteract the US sanctions. Separately, Russia’s Deputy Foreign Minister, Sergei Ryabkov, said Russia and its partners will take steps to counter new sanctions that the US has said it will impose on Iran.
Russia’s Energy Minister, Alexander Novak, said it was too early to say whether a deal between OPEC and non-OPEC producers to cut oil output would be extended into the second half of this year. He said oil demand in the third and fourth quarters of this year was still unclear. The Energy Minister said uncertainty over global oil demand in the second half of the year, including the effects of US sanctions, will have a big impact on whether Russia back extending the deal on oil output cuts.
President Trump did imposed sanctions on Iran’s supreme lead, Ayatollah Ali Khamenei, and eight senior military commanders. This seems to be a tactic to irritate Iranians while not doing much damage to the country. It has stirred up Iran as the state media says that the move has permanently closed the path for diplomacy.
The meeting this weekend on the sidelines of the G20 meeting between President Trump and President Xi isn’t being received very positively as the expectations appear to be low that any real progress will be made.
Fed Chairman Jerome Powell will speak on the economic outlook in New York at 1 PM EST today. Traders will be looking for any fodder about President Trump’s recent comments about the Fed. The market is expecting a rate cut at next month’s Fed meeting so any hints of something different will get the markets attention.