Oil prices hover around $75 per barrel mark ahead of Trump’s Iran deal decision

If the deal is scrapped prices could soar above $80 a barrel

Re-imposing sanctions on Iran could provide a supply shock that pushes up prices (REUTERS)

The price of oil is hovering around $75 (£55.50) per barrel, a three and a half year high, ahead of Donald Trump’s decision on the Iran nuclear deal.

President Trump has been a vocal critic of the deal, brokered during Barack Obama’s administration, throughout his election campaign and time in the White House.

The agreement, which lifted sanctions on Iran in return for promises that the Middle Eastern state would restrict its nuclear programme, must be re-certified every 90 days. Mr Trump has been threatening to scrap what he has described as the “worst deal ever” for months, and this time around, commentators are taking his comments seriously.

Abandoning the agreement would likely drive a short-term increase in oil prices, with traders predicting global benchmark Brent crude could hit $80 a barrel, due to the removal of Iranian oil from the market.

Meanwhile, Jack Allardyce, oil and gas analyst at Cantor Fitzgerald Europe, said: “Should the US offer a more conciliatory tone (which in our view seems unlikely), the negative impact on prices would likely be more significant in absolute terms, potentially taking Brent back below $70 per barrel.”

Analysts have noted markets are “cautious” ahead of the announcement, which is expected at 2pm local time, or 6pm GMT, on Tuesday.

“Although President Trump is widely expected to withdraw the United States from the 2015 nuclear deal, lessons from the past have repeatedly taught investors that the US administration can be highly unpredictable,” said Lukman Otunuga, research analyst at FXTM.

“An unexpected scenario, in which Trump announces that the US will remain in the nuclear deal, should be warmly welcomed by investors. Alternatively, risk aversion may intensify if he moves forward with the ‘nuclear option’, which reimposes all sanctions on Iran and pulls the US out of the deal.

Mr Otunuga added: “Whatever the outcome of Trump’s ‘decision’, we are not ruling out ramifications on the financial markets. Global stocks, oil and safe-haven assets are just a few of the instruments that could be impacted.”