President Donald Trump’s decision to named John Bolton as his new national security adviser could mean higher gas prices as the administration becomes more hawkish on the Iranian nuclear deal.
Bolton, who replaced H.R. McMaster Wednesday night as Trump’s primary foreign policy adviser, was chosen partially for his hawkish position on Iran and North Korea. Eliminating the Obama-era nuclear deal could potentially take millions of barrels of oil out of the market.
It is uncertain exactly how many barrels of oil would be taken offline if sanctions are reinstated on Iran. Up to one million barrels could be taken out of commission, analyst Joseph McMonigle of Hedgeye Risk Management estimated on March 14. Some believe the number could be higher or lower based on whether other countries follow suit.
Trump’s decision to fire McMaster comes shortly after State Secretary Rex Tillerson’s ouster. CIA Director Mike Pompeo, a former Kansas Republican lawmaker who shares Bolton’s position on Iran, is slated to replace Tillerson.
Tillerson’s ousting could also tilt the balance of power away from oil producers in Iran and Venezuela, analysts told The Wall Street Journal in March. Replacing the former ExxonMobil CEO with Pompeo will likely prompt oil prices to pitch upward, the analysts added.
Pompeo has long been a critic of the 2015 international agreement to curb Iran’s nuclear program that, if eliminated, could reimpose economic sanctions on Iran. This would limit oil exports and reduce global supply. Pompeo also wants to slap energy sanctions against Venezuela, a member of the Organization of the Petroleum Exporting Countries (OPEC).
Oil prices have continued to rise over growing concerns surrounding U.S. relations with major oil producers Venezuela and Iran. May West Texas Intermediate crude rose Friday to $65.40 a barrel on the New York Mercantile Exchange. The U.S. benchmark, which poised for its highest settlement since early February, meanwhile, aimed for a weekly rise of about 4.6 percent.
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