President Donald Trump‘s decision to fire Secretary of State Rex Tillerson could impact OPEC producers Iran and Venezuela and help boost the price of oil, analysts say.
Mr. Tillerson’s ouster may undermine the nuclear deal that allowed Iran to boost its oil production and could lead to sanctions against Venezuela, analysts said. In either case, this could mean less oil supply, which is bullish for prices.
Pierre Fabiani, a former executive at French oil giant Total who advises companies trying to enter Iran’s oil industry, said Mr. Tillerson’s dismissal was likely to lead to a return of restrictions on Iran’s oil exports and investments.
“I am very worried,” Mr. Fabiani said.
Brent, the international benchmark, briefly jumped by more than a dollar after the announcement before falling again to trade down 0.5% at $64.41.
The 2015 Iranian nuclear agreement between the U.S. and other world powers and Iran lifted most international sanctions against Tehran in exchange for a significant scaling back of its burgeoning nuclear program, opening the doors for foreign investment in its oil industry. Mr. Trump next faces a decision on waiving sanctions from that deal in May.
Mr. Tillerson had advocated for the U.S. to stick by the agreement, while Mr. Trump has repeatedly attacked it. In comments as he left the White House on Tuesday, Mr. Trump called Mr. Tillerson a “very good man” but said they disagreed on policy, notably the 2015 Iran nuclear deal.
The newly-named secretary of state, Central Intelligence Agency director Mike Pompeo, has also repeatedly denounced the deal, analysts said.
The appointment of an intelligence official to replace a former oil executive “increases the risk of hot conflicts” between Iran and the U.S. in Syria or with Saudi Arabia and Tehran in the Persian Gulf, said Roozbeh Aliabadi, who advises companies trying to enter the Iranian market. Such risk would be bullish for oil prices, he said....MORE