WTI crude was sliding after mixed inventory data, but accelerated the losses, breaking below yesterday's lows, after headlines suggesting Bolton was fired after disagreeing with Trump's desire to ease Iran sanctions to get a meeting with Rouhani.
As Bloomberg reports, President Trump discussed easing sanctions on Iran to help secure a meeting with Iranian President Hassan Rouhani later this month, prompting now former National Security Advisor John Bolton to erupt, and "argue forcefully" against such a step, according to the report.
More notably, there already was support for de-escalation of sanctions with Iran, because during the Monday Oval Office meeting, Treasury Secretary Steven Mnuchin voiced his support for the move as a way to restart negotiations with Iran, the Bloomberg sources said. At this point, Bolton exploded.
“Bolton made sure to block any and all avenues for diplomacy w/ Iran, including a plan being brokered by Macron,” Suzanne DiMaggio, a senior fellow at the Carnegie Endowment for International Peace, said on Twitter.
“The French are offering Trump a facing-saving way out of a mess of his creation. He should grab it.”
The reaction in crude (more supply) was instant...
As Bloomberg further notes, the White House has started preparations for Trump to meet with Rouhani this month in New York on the sidelines of the annual United Nations General Assembly the week of Sept. 23, according to the people. It’s far from clear if the Iranians would agree to talks while tough American sanctions remain in place.
According to sources, one floated scenario would be that Trump joins a meeting between Rouhani and French President Emmanuel Macron. The people said they had no indication it would actually happen.
Whether or not Iran and the US end up meeting this month, or next, is irrelevant: the implicit signal for an olive branch is now in the open. More importantly, we now know how Bolton's attempt to scuttle the de-escalation ended: one day later, Trump announced Bolton's termination.
Charles Kupchan, a senior fellow at the Council on Foreign Relations, said that at the very least, Bolton’s exit reduces the chances of a military escalation.
“It’s too hard to say if a meeting will happen given the question of whether it’s politically palatable for both leaders,” said Kupchan.
“But the likelihood of a meeting has gone up because one of its main detractors is now out of a job.”
Of course, easing any sanctions without major concessions from Iran would undercut the pressure campaign that not only Bolton, but also Secretary of State Michael Pompeo and Trump have said is the only effective way to make Iran change its behavior.
Asked on Tuesday if he could foresee a meeting between Trump and Rouhani during the UN meeting, Pompeo responded: “Sure,” adding, “The president’s made very clear, he is prepared to meet with no preconditions.”