President Trump will announce his decision on the Iran nuclear deal Tuesday, potentially jeopardizing deals that Boeing (BA), General Electric (GE) and other companies have made with the country.
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Trump tweeted Monday that he would announce a decision at 2 p.m. ET about whether the U.S. will reinstate sanctions that were lifted as part of the Iran nuclear deal.
Since sanctions were lifted in 2016, companies have sought to do business in Iran's large market. Boeing has agreed to sell 80 planes to Iran Air and 30 planes to another Iranian carrier, Aseman Airlines, for a total of about $11 billion at list prices. Rival Airbus (EADSY) also has a 100-jet, $10 billion deal with Iran that would be complicated by any sanctions that U.S. suppliers face.
Similarly, European companies like oil major Total (TOT) and auto giant Volkswagen (VLKAY) would also have to grapple with getting around any U.S. sanctions for their Iran business plans.
Meanwhile, some U.S. companies in the oil sector had made early moves in Iran. GE's oil and gas business has received millions of dollars in orders from Iran, and services giant Schlumberger (SLB) agreed in late 2016 to study an Iranian oil field.
Boeing was flat at 340.30 in pre-market trading on the stock market today. GE edged up 0.3%, Schlumberger rallied 1%, and Total was flat, while U.S. rivals Exxon Mobil (XOM) and Chevron (CVX) were up 0.3% and 0.1%, respectively.
Iran's oil sector has been looking for more international expertise and investment as it seeks to build its production back up. Output jumped to just under 4 million barrels a day from about 2.5 million when sanctions were in place, and Tehran has plans to ramp up further to 4.5 million.
Exports are also up, and jumped 16% last month to 2.70 million barrels per day, according to Platts, with India and China the biggest importers. Separately, Iran's oil ministry reported exports of 2.617 million bpd, the highest since the nuclear deal begin in January 2016.
"Demand for Iranian crude in China and India is likely to remain very strong even if sanctions are imposed, though refiners in Europe, South Korea and Japan are likely to tread more carefully," the Platts report said.
While the other signatories to the nuclear deal — China, France, Germany, Russia and the U.K. — have supported it, Trump has been vocal about his opposition.
But his tone on Twitter Monday seemed more positive than negative leaving some hope for the deal, sending oil lower. Brent crude was down 0.6% at $75.68 a barrel, and U.S. crude fell 0.9% to $70.09.
"The market is probably considering from his comments that we stay in this deal. That we would tweak it and not totally leave the deal," Josh Graves, senior market strategist at RJO Futures told Bloomberg.
If Trump decides to stay in the deal or only just reinstate some sanctions, Graves said "oil could trade back down to mid-$60s."
But Phil Flynn, a senior market analyst at the Price Futures Group, said in his morning energy report that it "seems clear that the U.S. more than likely will pull out of the deal and that will impact global oil supply."
"Many countries, who want to deal with the U.S., will shy away from buying Iranian oil. Even if Europe finds a way to stay in the deal, the most likely outcome is that Iran will have to give a big discount on their oil to move it."
The post From Boeing To GE, Companies Eye Trump's Decision On Iran Nuclear Deal appeared first on Investor's Business Daily.
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