With less than a week to go until Donald Trump withdraws from the Iran nuclear deal on May 12 absent some last minute diplomatic miracle (the recent discovery of John Kerry's covert involvement to preserve the deal will only cement Trump's resolve to abandon Obama's signature foreign diplomatic treaty), Iranian President Hassan Rouhani warned the US of "historic regret" if it pulls out from the nuclear deal.
"If the United States leaves the JCPOA, you will soon see the historic regret which the move will bring about for Washington", Rouhani told a crowd in Sabzevar in northeast Iran.
Under the deal, technically known as the Joint Comprehensive Plan of Action (JCPOA), signed in 2015, the U.S. and other world powers agreed to lift some of the economic sanctions imposed on Iran in return for the latter agreeing to rein in its nuclear program. The biggest, impact, however was lowering the price of crude, as the global market suddenly had access to nearly 1 million in Iranian oil output; and one of the key reasons why the price of oil has spiked in recent weeks is the market's growing confidence that Trump will dump the JCPOA.
Whereas Trump has called the pact "one of the worst negotiated agreements" he has ever seen, and has repeatedly threatened to pull the U.S. out of the deal and has to make a decision on whether he will do so by May 12 deadline, Rouhani said Iran has been “loyal to its promises”.
"But it is explicitly telling the whole world, Europe, America, the West and the East that we will not talk about our country's weapons and defense with anyone."
"We will build and store any amount of weapons and missiles needed by the country.
It is none of anybody's business what decision the Iranian people have made for their defense. We will not talk about the precision [of missiles] and defensive power with anyone," Rouhani said.
Still, with the deal effectively over, Rouhani also said that Tehran has plans in place for a worst case scenario: "We have plans to resist any decision by Trump on the nuclear accord,” Rouhani said at a rally in northeast Iran, according to Reuters.
“Orders have been issued to our atomic energy organization ... and to the economic sector to confront America’s plots against our country,” he added during the remarks, which were broadcast on state TV.
Last October, Trump disavowed the deal but stopped short of withdrawing the U.S. from it. Instead, he demanded that negotiators fix what he has deemed as holes in the agreement.
Trump has set a May 12 deadline for deciding whether to withdraw from the Obama-era multinational agreement, which provides Iran with sanctions relief in exchange for curbing its nuclear program.
The problem, with a US withdrawal virtually assured, is two-fold: oil prices are set to surge even higher, undoing all the economic benefits to US households from Trump's tax cuts, as discussed previously, while the mere hint that Iran is no longer constrained from making nuclear weapons would be sufficient to prompt a military offensive by Israel, which for the past 7 years has repeatedly warned that even the suggestion of Iran developing nukes is a "red line" and would lead to a "defensive" strike by Israel.
In short: commodity and input price inflation may be about to soar, with gas prices set to revisit levels not seen in 4 years, while the Middle East is about to get far more volatile.