The news for the last few weeks in the U.S has revolved around the uncertainty of oil prices and curiosity whether Trump will leave the Iran nuclear deal.
On Wednesday it was confirmed the U.S will be leaving the Iran nuclear deal, Trump’s speech to the U.S public stated that the deal is “defective at its core.” (Trump, 2018)
Why should we care here in the U.K about the U.S presidents decisions about oil? Here’s a bit of information about what everyone’s talking about and why it impacts us.
What is the Iran nuclear deal?
The Iran nuclear deal was agreed between Germany, China, E.U, Russia and France with Iran in July 2015. The deal was arranged due to the concerns worldwide about the production of nuclear weapons.
From 2010 -2015 Iran had heavy sanctions placed upon them by the U.S, this restricted transportation and sales of oil internationally. Iran’s oil sector had a loss in revenue due to sanctions between this period. Therefore, when Iran was approached by these countries they were pleased to accept the nuclear deal in return for the sanctions to be lifted. This gave Iran the freedom to export oil globally and boost their economy.
The agreement was to limit the nuclear weapon programme in Iran which were using products that can be used to create nuclear weapons such as:
- Stores of centrifuges
- Enriched Uranium
- Heavy water
These products were restricted for use to assure the safety regarding nuclear weapons across the agreed countries.
Why has Trump left the Iran Nuclear Deal?
Trump has made the announcement to exit the Iran nuclear deal to the world and it has caused some uproar from politicians and the public globally. He stated the deal is “one-sided”, “flawed” and “poorly negotiated”.
In the media, it has been recently reported Iran has been concealing oil supplies from the U.S to boost prices higher.
Trump argues that the Iran nuclear deal fails to restrict the creation of certain weapons such as ballistic missiles, therefore, can not offer “peace”. His beliefs are that regardless of signing the deal, the U.S is not reassured that Iran will not create and acquire nuclear weapons. Concluding that it does not serve the U.S positively to continue the agreement.
How will Trump’s decision affect the U.K?
Oil prices are at an all-time high in the last three days, this is the highest oil prices have been since 2014 costing over $70 a barrel. Your most likely thinking, but how will this impact me?
Trump exiting the Iran nuclear deal has led to less supply of oil and more demand. The world uses oil to fuel our cars, homes and air transportation. Iran’s oil supplies are 3% of the overall oil in the world, this may seem a small percentage but does impact the oil market.
If your home is fuelled by a heating oil tank, an oil boiler, or AGA you have probably already guessed this will affect you. With the U.S implementing sanctions on Iran, but not for another 90 and 180 days, it is advised to purchase your oil sooner rather than later. The prediction is that oil prices will further increase the rest of the year and next year (longforecast.com). If you are looking to purchase oil soon contact Boiler Juice to provide you with the best price for oil in your local area.
An issue that will noticeably affect the U.K and your daily commute is the predicted increase in transportation fuel. The increase in oil and petrol come hand in hand, some companies that supply the U.K with petrol may be affected by the U.S exiting the Iran nuclear deal. This is due to having profitable contracts with oil suppliers in Iran, with sanctions on its way this will create problems for those large companies to access their oil.
How to lower your monthly oil costs
To make sure it’s not all gloom and doom, here are some tips on keeping your pennies in your pocket during the spike in oil prices.
- Shop around for petrol prices, take note in the next few weeks if prices increase locally and which petrol stations have increased.
- Use the heating oil comparison site Boiler Juice to get the best quote possible for your heating oil
- Check the oil prices charts a for best times to buy