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  Click to listen highlighted text! The appointments of Pompeo and Bolton have made a lenient stance on the Iran regime inconceivable. Instead, they support Trump in delivering on his promise to withdraw from the Iran nuclear deal and reinstate extended economic sanctions. It is doubtful if the U.S. manage to convince anyone but Israel to join in on its retaliatory measures against Iran. Nevertheless, it seems like Trump is determined to also sanction any non-U.S. entity that continues to deal with Iran after the 180-day waiver. In addition, the conflict between Israel and Iran is already on an escalating and dangerous path. Depending on Iran resuming its nuclear program, a military escalation including pre-emptive strikes is again a possibility. Ordered by probability, the below table shows the expected impact on Iran crude oil production in the four main scenarios: Scenario  Expected loss of Iran crude oil production and exports  Comment  U.S. sanctions  0.3-0.8 mbd Loss depending on level and efficiency of U.S. sanctions  U.S. + EU sanctions  0.5-1.0 mbd  Similar to production gain after the deal  Military conflict escalation  > 0.8 mbd  A possible outcome if economic sanctions does not prevent Iran from resuming its nuclear program Level of production loss above 0.8 mbd directly linked to level of escalation Re-negotiated deal  o mbd Difficult to bring Iran back to the negotiation table after U.S. withdrawal from the deal  Source: Vontobel Asset Management, Full transcript of Trump speech: https://www.nytimes.com/2018/05/08/us/politics/trump-speech-iran-deal.html Jon Andersson - Head of Commodities - Vontobel

The appointments of Pompeo and Bolton have made a lenient stance on the Iran regime inconceivable.

Instead, they support Trump in delivering on his promise to withdraw from the Iran nuclear deal and reinstate extended economic sanctions. It is doubtful if the U.S. manage to convince anyone but Israel to join in on its retaliatory measures against Iran.

Nevertheless, it seems like Trump is determined to also sanction any non-U.S. entity that continues to deal with Iran after the 180-day waiver. In addition, the conflict between Israel and Iran is already on an escalating and dangerous path. Depending on Iran resuming its nuclear program, a military escalation including pre-emptive strikes is again a possibility. Ordered by probability, the below table shows the expected impact on Iran crude oil production in the four main scenarios:

Scenario  Expected loss of Iran crude oil production and exports  Comment 
U.S. sanctions  0.3-0.8 mbd Loss depending on level and efficiency of U.S. sanctions 
U.S. + EU sanctions  0.5-1.0 mbd  Similar to production gain after the deal 
Military conflict escalation  > 0.8 mbd 

A possible outcome if economic sanctions does not prevent Iran from resuming its nuclear program

Level of production loss above 0.8 mbd directly linked to level of escalation

Re-negotiated deal  o mbd Difficult to bring Iran back to the negotiation table after U.S. withdrawal from the deal 
Source: Vontobel Asset Management, Full transcript of Trump speech: https://www.nytimes.com/2018/05/08/us/politics/trump-speech-iran-deal.html

Jon Andersson - Head of Commodities - Vontobel

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