Eliminating any doubt as to what Trump will do at 2pm today (if not the language he will use and what the implications will be), Barak Ravid from Israel's Channel 10 reported this morning that following last week's pilgrimage by Macron and Merkel, both hoping to prevent Trump from withdrawing from the Iran deal, on Friday the new US Secretary of State, Mike Pompeo, told his colleagues from the E3 - France, Germany and the United Kingdom - that President Trump has rejected the understandings that were drafted with American negotiators over the last four months regarding a possible fix of the Iran nuclear deal, a "de-facto U.S. announcement that it was walking away from negotiations with the Europeans over the Iran deal."
According to the report, on Friday Pompeo organized a conference call with his three European counterparts, at which point Pompeo thanked the E3 for the efforts they had made since January to come up with a formula that will convince Trump not to pull out of the nuclear deal — but made it clear the President wants to take a different direction.
According to the sources, Pompeo told his European counterparts that — after he showed the document to Trump — the president told him it would not change his thinking about the nuclear deal. He then told the E3 foreign ministers to prepare themselves for an announcement by Trump within the coming days.
Not surprisingly, the report notes that European negotiators felt the American team, led by State Department policy planning chief Brian Hook, was passive and unwilling to try to make progress, perhaps due to an assessment that Trump didn’t really want a deal with the E3.
France, Germany and the U.K. felt the parties were close to a deal but that the U.S. walked out 300 feet before the finish line.
Pompeo then reportedly briefed Trump on the main stumbling block left surrounding the deal, which according to Channel 10 was the so-called "sunset clause," which starts lifting limitations from the Iran nuclear program after 10 years from the day it came into force.
As Axios adds, a senior Trump administration official didn't dispute the account of the call:
"The reality is that the E3 could not agree to end the sunset clauses. That provision is critical to fixing the flawed deal." They added, "I don’t want to get ahead of the president, but I can say that the administration’s position on the importance of fixing sunset clauses of the Iran deal is well known."
Still, there is some hope that a deal is still possible as Pompeo also said that it might be possible to return to the negotiating table at a later stage after Trump's announcement. That however is not too realistic, because according to newswires, Iran's senior hardline official says it would be wrong to remain in the nuclear deal should the US drop it.
What are next steps?
According to Axios, "senior officials from the EU, France, Germany and the U.K. will meet today in Brussels to prepare for Trump's announcement — both politically and economically.
After Trump's statement, the European powers want to issue a joint statement which will make it clear they are staying in the Iran deal in an attempt to prevent its collapse.
If that is indeed the case, and if Europe continue to absorb Iranian oil exports, it may very well be the case that as Barclays said last night, Iran's outbound oil production will not be impacted, and the recent surge in the price of oil, most of due to concerns about the collapse of the Iran deal, will have been for nothing.
Oil was last trading a fraction over $70, after hitting a 4 year high of $70.84 yesterday.