President Trump had railed against the Iran nuclear deal since its inception, so it was only a matter of time before he killed it. This article is dedicated to sussing out the winners and losers of Trump pulling out of the Iran deal.
The Winners of Trump pulling out of the Iran Deal
Iran’s hardliners are the biggest winners. Iran’s hardliners are the only people more critical of the deal than President Trump and Israeli Prime Minister Netanyahu. President Trump killing the deal helps them in two ways.
First, this gives Iran’s hardliners a legitimate reason to pursue a nuclear bomb. Second, Iran’s hardliners could now replace moderate leader Rouhani with someone who falls in line.
Oil prices will rise in the long run. The end of the Iran nuclear deal has the potential to hamstring Iranian oil production. Moreover, it also increases the risk of more conflict in the wider oil-rich Mideast.
Iran produces about 4.6 million barrels per day, sanctions could reduce that by about a million barrels. On top of that, the Mideast accounts for a staggering 34.5% of global oil production. Any threat to that much oil from a more belligerent Iran will have an appreciable effect on prices.
Israel’s embattled Prime Minister Netanyahu also gets a political win. Netanyahu is facing corruption cases that are threatening to bring him down. The end of the Iran nuclear deal gives him a respite from these scandals. That said, this increases the risk of a nuclear Iran and makes Israel less safe in the long run.
Saudi Arabia gets a double win. First, the Saudis rope America into another Mideast conflict to take down its arch nemesis Iran. Second, Iranian oil production will decline and that means rising market share for Saudi Arabian output.
The Losers of Trump pulling out of the Iran Deal
The United States gets dragged into yet another endless Mideast mess. Ending the nuclear deal will require the United States to increase support to its local allies as tensions inevitably ramp up. It is impossible to predict right now what that will entail. But it will cost money and even put US soldiers in harms way in Iraq, Syria and the Persian Gulf.
American diplomatic reputation takes another hit. Virtually every credible source agrees that Iran has complied with the nuclear deal. Accordingly, the United States withdrawing unilaterally from the agreement means other countries are less likely to trust the United States going forward. This may have immediate implications as the US begins direct negotiations to de-nuclearize North Korea.
American consumers will see higher prices at the pump. Gasoline prices have already climbed about 40 cents in the last six months and could easily go up another 40 cents as oil prices rise. The average American driver consumes about 656 gallons per year. So, that means American consumers could see their gasoline bill go up by $524.80 per year.