Obama reaches historic deal with Iran

Raffaele Zenti Commodities, Countries Leave a Comment

Iran agreed yesterday to curtail nuclear activities in return for easing of some sanctions on oil, auto parts, gold and precious metals. The first major crack in a decade-long deadlock.

Iran and the world powers reached a preliminary accord on the country’s nuclear program that will ease economic sanctions while keeping a cap on oil sales.

The deal is reversible. It was announced today after five days of talks in Geneva. It releases some of Iran’s oil assets and allows it to keep exporting crude at current levels.

Crude oil headed for the biggest drop since Nov. 1, after Iran reached an accord to ease sanctions on its oil exports. The euro fell from a three-week high as gold slid to the lowest since July.

We can expect some price weakness as the market adjusts to the future prospect that Iranian exports will resume.  The accord may put “downward pressure” on oil prices because it will let Iran raise exports by nearly 300,000 barrels a day from last month’s level.

Crude oil led energy prices – from gasoline to heating oil – lower.

CrudeOil-november2013

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About the Author

Raffaele Zenti

Co-founder and Head of the Financial Strategies Group of Adviseonly (www.adviseonly.com). Expert in finance and risk management. He graduated in Economics from the University of Turin, with a specialisation in Statistics. He has worked in assets allocation for Sella Asset Management, where he was head of the Financial Business Consultants unit in Engineering. Previously he worked at Allianz Global Investors Italy for ten years as Head of Risk Management and then as Head of Quantitative Management. He was recently the Quantitative Management Manager at Banca Leonardo Group and provided independent consultancy for IDeA Sim - DeA Group. He is also a lecturer in Quantitative Portfolio Management at the University of Turin Master’s in Finance programme, has published various articles in asset management and finance magazines (including the Journal of Asset Management, Economic Notes and Risk) and has contributed to books on subjects related to investment choices and Risk Management.

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