Trump exits Iran nuclear deal: Oil price may soar, hit India, says Assocham

US President Donald Trump said on Tuesday that he will withdraw his country from the Iran nuclear deal. Photo: Reuters
Iran's Supreme Leader Ayatollah Ali Khamenei on Wednesday called President Donald Trump's speech announcing US withdrawal from the 2015 nuclear agreement with Tehran "silly and superficial".

"Last night you heard that the US President made silly and superficial remarks. There were may be more than 10 lies in his comments. He threatened both the establishment and the nation, saying he will do this and that," Ayatollah Khamenei said in a meeting with a number of teachers and university professors in Tehran.

"Trump, I tell you on behalf of the Iranian nation: You are making a damn mistake and you cannot do anything," Khamenei was quoted as saying by Press TV.

On Tuesday, Trump announced Washington's withdrawal from the Iran nuclear agreement, officially called the Joint Comprehensive Plan of Action (JCPOA). It was signed between Iran and China, France, Russia, Britain, the US and Germany besides the EU.

Iran, in the 2015 pact, had agreed to halt its nuclear programme in return for an easing of economic sanctions on Tehran.

Khamenei said the US problem with Iran was not related to the country's nuclear programme. "We accepted the JCPOA, but enmities with the Islamic Republic did not end. Now they raise the issue of our presence in the region and the issue of missiles. If we accept them too, they will bring up another issue," he said.

"The reason for US opposition to the establishment is that the US used to completely dominate (Iran) but the (Islamic) Revolution cut off their hands (from the country)."

The Iranian leader said "the Americans want rulers who would carry out their errands and dish out their money, as is the case with the Persian Gulf states".  

Here are the top questions, reactions and consequences of Trump's decision to pull the US out of the Iran nuclear deal:

1) Assocham says Trump's move to re-impose sanctions on Iran to hit Indian economy:
"While there are other imponderables like Saudi Arabia trying to increase crude output along with major OPEC producers and the US allies like France not being on board, the global economy does face bouts of uncertainty and volatility. In the short term, it is not a good news for the Indian economy which meets bulk of its crude oil requirements from imports," Assocham Secretary General D S Rawat said.

2) India's oil import from Iran not to be immediately impacted by US sanctions, say experts: Trump's decision to bring back financial sanctions against Iran as he pulls the US out of the Iran nuclear deal would not impact India's oil imports from the Islamic Republic as long as European countries did not follow suit, officials told news agencies on Wednesday. India pays its third-largest oil supplier in euros using European banking channels and, unless these are blocked, imports would continue, they said.

"Immediately, there will be no impact but we have to wait and watch how other nations, particularly the European block, react," said A K Sharma, director (Finance) of Indian Oil Corp (IOC), the country's largest oil firm. If the European Union (EU) were to continue the status quo and not re-impose sanctions, Iranian supplies to India would continue unhindered, he said. However, paying Iran for the oil India buys would become difficult in case European countries joined the US in imposing financial sanctions and blocked banking channels, he added. 

3) China vows to safeguard Iran nuclear deal: Voicing regret over Trump's decision to pull the US out of the Iran nuclear deal, China on Wednesday vowed to "safeguard" the multilateral agreement. "China calls on all relevant parties to assume a responsible attitude, bear in mind the long-term and general interest, persist towards a political and diplomatic resolution and properly control disputes, so as to return at an early date to the right track of implementing the deal," foreign ministry spokesman Geng Shuang told a regular press briefing. 

4) What is the Iran nuclear deal? Signed in 2015, the Iran nuclear deal, known officially as the Joint Comprehensive Plan of Action (JCPOA), was originally an accord between Tehran and the P5+1 group of world powers -- the US, UK, France, China, Russia, and Germany. Under the deal, Iran agreed to limit its nuclear activities and allow international inspectors access in return for lifting of economic sanctions against it. With Trump pulling the US out, the multilateral deal still involves four major global powers and nuclear weapons states.     

5) Why did Trump pull US out of the Iran deal? Trump's stated reasoning for exiting the deal is that the limits it places on Iran's nuclear operations are "very weak" and that continuing with the deal could lead to a nuclear arms race in the Middle East.  

While announcing his decision, Trump repeated his rhetoric against Iran and the multilateral nuclear deal, or the Joint Comprehensive Plan of Action (JCPOA). Trump said that the JCPOA had failed to prevent Iran from developing nuclear weapons or supporting terrorism in the region. 

According to Trump, the JCPOA "allowed Iran to continue enriching uranium" and "lifted crippling economic sanctions" on Iran in exchange for "very weak limits" on its nuclear activity "and no limits at all" on its efforts to expand regional influences. "The deal's sunset provisions are totally unacceptable," Trump said, adding, "If I allowed this deal to stand, there would soon be a nuclear arms race in the Middle East. Everyone would want their weapons ready by the time Iran had theirs."    

What will the US do next? While announcing his decision, Trump said that the US will impose "the highest level" of economic sanctions on Iran. "Any nation that helps Iran in its quest for nuclear weapons could also be strongly sanctioned by the United States," he added.   

After the announcement, the White House said that Trump had "directed his administration to immediately begin the process of re-imposing sanctions related to the JCPOA". Further, the statement said that "the re-imposed sanctions will target critical sectors of Iran's economy, such as its energy, petrochemical, and financial sectors". 

"Those doing business in Iran will be provided a period of time to allow them to wind down operations in or business involving Iran," said the White House, adding, "Those who fail to wind down such activities with Iran by the end of the period will risk severe consequences." 

Further, US Secretary of Treasury Steven Mnuchin said in an announcement that "sanctions will be reimposed subject to certain 90-day and 180-day wind-down periods". 

"At the conclusion of the wind-down periods, the applicable sanctions will come back into full effect. This includes actions under both our primary and secondary sanctions authorities," he added.

Meanwhile, Secretary of State Mike Pompeo said that the US "will be working with our allies to find a real, comprehensive, and lasting solution to the Iranian threat."

6) What will Iran do now? Tehran appears to be looking to salvage the nuclear deal, failing which, it has warned that it will restart Uranium enrichment. Before taking such a step though, it will approach the other countries that are party to the multilateral deal.   

In a live speech broadcast from Press TV after Trump's announcement, Iranian President Hassan Rouhani said on Tuesday that Tehran would remain in the nuclear deal with the other signatories without the US. "From this time on, the nuclear deal is an accord between Iran and five countries," said Rouhani, adding, "I am happy that an intruder (United States) has exited from the nuclear deal."

The Iranian president added that the JCPOA was not a deal between Iran and the United States, instead it was an international accord approved by the United Nations. 

Further, Rouhani said that he has asked the Iranian foreign minister to initiate negotiations with the European signatories -- UK, France, and Germany -- as well as China and Russia over measures regarding the fate of the deal. He also said that the Atomic Energy Organization of Iran (AEOI) will resume industrial uranium enrichment at any level if the upcoming negotiations do not save Iran's interests guaranteed under the JCPOA.

"Since now, we should examine how the remaining big powers in the accord would deal with it," Rouhani said, adding that "if the deal remains live, we can take steps for the world's peace and security".

"If our expectations from the JCPOA are met without the United States, so much the better, otherwise, we will make our own decision," he said. 

7) What will UK, France, and Germany do now? In a joint statement released by Macron's office, French, German and British leaders regretted Trump's decision. Macron, Merkel, and Theresa May reiterated their "continued commitment" to the Iran nuclear deal, stressing that it "is of particular importance to our shared security".   

"This agreement remains important for our shared security. This resolution remains the binding international legal framework for the resolution of the dispute about the Iranian nuclear programme. We urge all sides to remain committed to its full implementation and to act in a spirit of responsibility," the three leaders said.   

Further, the leaders of the three countries encouraged Iran to show restraint in response to the US decision. Iran must continue to meet its own obligations under the deal, cooperating fully and in a timely manner with IAEA (International Atomic Energy Agency) inspection requirements, they reiterated. "There must be no doubt: Iran's nuclear programme must always remain peaceful and civilian. While taking the JCPOA as a base, we also agree that other major issues of concern need to be addressed," the statement said.  

"A long-term framework for Iran's nuclear programme after some of the provisions of the JCPOA expire in 2025 will have to be defined. We must also address shared concerns about Iran's ballistic missile programme and its destabilising regional activities, especially in Syria, Iraq and Yemen. We have already started constructive and mutually beneficial discussions on these issues, and the E3 is committed to continuing them," they said.  

How has Russia reacted to the development? Russia's foreign ministry said Moscow was deeply disappointed by Trump's decision to abandon the Iran nuclear deal, a move it called a blatant violation of international law. In a statement issued on Tuesday, the ministry said it was "deeply disappointed by the decision of US President Donald Trump to unilaterally refuse to carry out commitments under the Joint Comprehensive Plan of Action", adding that Washington's actions were "trampling on the norms of international law".   

8) What does Obama, a major architect of the deal, have to say about Trump's decision? Former US President Barack Obama called Trump's move a "serious mistake", adding that it could trigger an arms race in the Middle East.   

"I believe that the decision to put the JCPOA (Joint Comprehensive Plan of Action) at risk without any Iranian violation of the deal is a serious mistake," Obama said in a statement soon after Trump announced his decision. The former President also said that the decision was "misguided" and that it "turns our back on America's closest allies". 

"The consistent flouting of agreements that our country is a party to risks eroding America's credibility, and puts us at odds with the world's major powers," Obama said. 

Countering Trump's criticisms of the JCPOA, Obama said that the agreement "is working," since it has "significantly rolled back" Iran's nuclear program. Obama added that, according to US intelligence agencies, Iran "is meeting its responsibilities under the deal" and that pulling the United States out of the agreement could undermine it and "trigger an arms race".  

9) How did oil prices react to Trump's Iran deal pullout? Crude oil prices jumped back to near 3 1/2-year highs on Wednesday after Trump pulled the United States out of the Iran nuclear deal, sparking worries about global oil supplies, Reuters reported.  

West Texas Intermediate (WTI) crude futures traded at $70.57 per barrel, up 2.2 per cent and near Monday's peak of $70.84, the highest level since November 2014. Brent crude futures jumped as much as 2.5 per cent to a 3 1/2-year high of $76.75 in Asian trade on Wednesday.

Iran, the third-biggest producer among the Organization of the Petroleum Exporting Countries, produces about 3.8 million barrels per day (bpd), or about 4.0 per cent of the world's oil supplies. 

10) Have any big commercial deals been hit by Trump's pullout? US Treasury Secretary Steven Mnuchin said that the US' withdrawal from the Iran nuclear deal means Boeing's licenses to sell billions of dollars in commercial jetliners to Iran will be revoked. Mnuchin said that the existing licenses held by Chicago-based Boeing Co and its European competitor, Airbus Group, would be invalidated by President Donald Trump's decision. 

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