NEW YORK– Turbulence rocked the oil market after President Trump announced the United States will exit the Iran nuclear deal and impose “powerful” sanctions on the country.
In volatile trading, crude oil was down 2.5%. Oil prices nearly turned positive for the day while Trump was speaking. They had been down as much as 4.4% earlier amid nervousness ahead of the official announcement.
Trump slammed the Iran nuclear deal as a “horrible, one-sided deal” that was “defective at its core.”
After he spoke, Trump signed a memorandum that he said would begin reinstating American sanctions on the Iranian regime. Those sanctions could take months to go into effect as the US government develops guidance for companies and banks.
The key to the energy market is how much Trump’s tough stance on Iran will restrict the flow of crude out of the OPEC nation. Analysts say that up to 1 million barrels per day of Iranian crude are at stake.
That could hold prices down in a market that has already been short on supply because of production cuts by OPEC and Russia. Crude oil prices settled above $70 a barrel on Monday for the first time since late 2014.
The ultimate impact will be determined by how Iran’s major customers — China, the European Union, India and South Korea — respond to Trump’s sanctions.
“Any nation that helps Iran in its quest for nuclear weapons could also be strongly sanctioned by the United States,” Trump said.
— CNN’s Kevin Liptak contributed to this report.