Here’s how US’ withdrawal from Iran nuclear deal could backfire

U.S. president Donald Trump said that the country has withdrawn from the Iran nuclear deal, and the decision was met with flak from different groups. Here are some possible scenarios that could bring more harm to the economy than good.

According to Business Insider, oil will always become a factor when dealing with Iran. As such, the withdrawal could lead to the removal of 250,000 to 500,000 barrels per day of Iranian oil in the U.S market. The shortage in supply will create an effect on the price of oil and would eventually hike present rates.

Experts are claiming that crude oil prices factor in the surge of gas prices. A $7 bump in crude oil prices will yield an additional 16.8 cents in the price for each gallon. The added burden will be passed on to the consumers and households of average Americans are projected to take the crucial hit.

“We estimate that the Tax Cuts and Jobs Act and the Bipartisan Budget Act will contribute 0.7 percentage points to GDP growth in 2018, but if WTI crude prices average $70 per barrel this year, this could offset half of the fiscal boost in 2018,” Oxford Economics chief U.S. economist Greg Daco explained.

Any benefits of the tax cuts would likely be offset by higher oil prices. The government, on the other hand, is not bothered as other major oil producers could be tapped to step in such as Saudi Arabia or U.S. shale producers.

In his The Guardian article, Senator Bernie Sanders lambasted the decision of Trump because all the years of hard work of the U.S., together with diplomats from the U.K., France, China, Russia and Germany, for the Joint Comprehensive Plan of Action (JCPOA) or the Iran nuclear deal will all go down the drain.

In the midst of pending talks with North Korea, another nuclear nation, Sanders believes that Trump’s backing out of the JCPOA sets a negative precedent in future deals and negotiations with other nations. After all, no one would want to make a deal with the U.S. anymore since it can be discarded anytime at the whim of President Trump.

Iranian foreign minister Mohammad Javad Zarif (pictured) is reported to be at talks with Britain, France, Germany and the European Union to iron out concerns over its nuclear deal. (Photo by Chatham House via Flickr. CC BY 2.0)

It is important to note that Trump rejected the advice of his own camp, specifically joint chiefs chairman Gen. Joseph Dunford and defense secretary James Mattis as they both wanted the U.S. to stay in the deal. But like what happened with the Paris Agreement, Trump hastily made the decision.

It is becoming clear that the U.S. is alone in this one. Iran officials have begun talking with Europe to hopefully save what is left of the Iran nuclear deal as the U.S. starts imposing more sanctions. After a meeting with officials from Britain, France, Germany and the European Union, Iranian foreign minister Mohammad Javad Zarif remains hopeful, The Independent reported.

Meanwhile, according to CNN, North Korea, which is expected to hold a meeting with the U.S. next month for denuclearization and peace settlement on the Korean Peninsula, has started to flex its muscles should the U.S. continue to mount pressure and assert its one-sided demands.

“We have never had any expectation of US support in carrying out our economic construction and will not… make such a deal in future,” North Korean First Vice Minister of Foreign Affairs Kim Kye-gwan said in a statement published by Korea Central News Agency.

The ball is now in the hands of the U.S. officials. Trump, with all his bravado, should take the advice of his team of experts or lose the North Korean deal and the respect of other nations altogether.