Trump Rejects Iran Deal Terms as Oil Prices Fall Amid Geopolitical Tensions
Oil prices declined on August 28, setting up their first weekly drop in three weeks. Despite this, crude oil still managed to rise in the previous session after a report that US President Donald Trump was not interested in returning to the terms of an earlier deal with Iran.
The Wall Street Journal reported that the Trump administration repeatedly told mediators it did not want to revive the June memorandum of understanding, complicating diplomatic efforts aimed at restarting talks between Washington and Tehran. The United States had announced 'toughest sanctions in history' on Iran a day prior, which Tehran called an 'inhumane and hostile act.'
The geopolitical tensions surrounding this situation are reflected in other regions as well. Moscow warned it could target British military targets inside and outside Ukraine in response to attacks by Kyiv using British-supplied long-range cruise missiles.
JPMorgan estimates that each additional month of disruption could add around $7 to $8 a barrel to Brent prices, with the bank expecting average monthly Brent prices to climb to around $114 a barrel if disruptions continue for three months. Goldman Sachs also warned that Brent could rise to $120 a barrel if shipping disruptions through the Strait of Hormuz persist.