President Trump will have until May 12 to decide whether the United States will remain a signatory to the Iran deal, an agreement which was signed in 2015 between Iran and six major world powers.
Terms meant that major economic sanctions were lifted from Iran, with the nation in turn agreeing to dismantle its uranium enrichment programs (effectively eliminating their pathway towards producing nuclear weapons).
Experts believe that the Iran deal was the very best option available when it was signed, however, President Trump and other politicians in the U.S. believe that the deal is too lenient on Iran. Trump has indicated that he may withdraw America from the deal, and reinstate sanctions.
This is a hot global topic right now, and it’s also one that investors need to be aware of. These are the reasons why…
Reintroduced Sanctions Would Cause Oil Prices to Rise
Iran is a major exporter of oil, and their output has a direct influence on global prices. If the United States were to block oil exports from Iran, then it is likely that worldwide prices would go up.
High oil prices are bad news for the global economy and also for investors. When oil prices go up, so do the prices of food, plastic, and consumer goods. Industry also suffers from higher fuel prices and increased material prices.
This could become damaging to global trade and the American economy. American goods producers could be directly impacted, and publicly traded companies could find that share prices decline as profitability decreases.
Although the United States does have significant oil production capabilities, it still imports the equivalent of 10.1 million barrels per day.
Sanctions Could Derail an $8 Billion Boeing Contract
Outside of the oil price impact, the biggest threat to the United States is the potential loss of an $8 billion deal between Boeing (NYSE: BA) and Iran Air. Boeing will supply 80 commercial jets to Iran with the first deliveries starting later this year.
If the United States pulls out from the Iran deal, then this sale has a high likelihood of being blocked. The loss of an $8 billion contract would be disastrous for Boeing’s investor confidence.
Boeing has stated previously that the sale will support tens of thousands of American jobs.
President Trump’s Decision on Iran Deal Will Be Important for Investors and the Economy
Sanctions do have the potential to weaken the United States economy and hurt the stock market. Trump will decide the country’s position before May 12. Until then, investors are advised to watch markets closely. Any panic selling of stocks could create some great opportunities in the next two weeks.
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