The global impact of the United States’ exit from the Iran nuclear deal

The United States' exit from the Iran nuclear deal, known as JCPOA (Joint Comprehensive Plan of Action), has shaken the geopolitical balances and has caused repercussions on a global level, influencing not only international politics, but also the global economy.

The JCPOA, signed in 2015, represented an important multilateral agreement aimed to limit Iran's nuclear program in exchange for the gradual reduction of international sanctions. However, in May 2018, the Trump administration announced the United States' unilateral withdrawal from the agreement, imposing new heavy sanctions on Iran. On one hand, this move created growing tension between the United States and Iran together with the risk of conflict in the Middle East region, on the other hand it undermined the credibility of the multilateral agreements, and questioned the ability of the United States to respect the commitments made at international level.

The impact of this situation on the global economy has been significant. The new US sanctions have affected many Iranian industries, especially in the oil sector, with direct consequences on the supply and price of oil on an international level. Iran, one of the major oil producers in the world, has seen its exports drastically reduced by 60% compared to the years before the JCPOA, while countries dependent on Iranian supplies have had to look for alternatives, increasing pressure on global markets. It is estimated that before the US withdrawal, Iran was one of the world's leading oil producers, with an average production of around 3.8 million barrels per day. The reduction of its oil exports has had a tangible impact on global oil markets. Iran's decline in supply has led to a rise in global oil price. Moreovr, the growing geopolitical uncertainty connected to the tensions between the United States and Iran has fed worries about the stability of oil supplies in the Middle East. While some countries have attempted to compensate for the absence of Iranian oil by increasing their production, not all have been able to do it completely. Some nations have had to draw on their strategic reserves to stabilize the oil markets and to mitigate the impact of the reduction in Iranian exports.

Moreover, beyond the scarcity of oil, the uncertainty due t o the United States’ withdrawal from the agreement made that companies, uncertain about the future of trade relations with Iran and about the possible US sanctions, have reduced trade with the Persian country, causing a slowdown of the economic activities and investments, not only on a regional level but also on a global one. The response from the international community has been multicolored. Many Europena countries have expressed their commitment in respecting the agreement and in keeping the diplomatic and commercial channels open with Iran despite US pressure.
However, the situation stays unstable, considering the risk of a further crisis escalation and that could involve other regional actors. In particular, with the current conflict in the Middle East and the growing geopolitical tensions globally, the issue is at the center of the debate once again. The escalation of Middle Eastern conflicts is leading to an increase of divisions between the countries of the region and the international actors involved. This further complicates the diplomatic efforts made to resolve the Iranian nuclear issue, with the risk of the emersion of new alliances or contrasts that influence the negotiation process.

Finally, the United States’ exit from the Iran Nuclear Deal has created a series of consequences on an international scale, putting into question the geopolitical stability and influencing the global economy. The resolution of the crisis will require a conjunct effort by the international community to find diplomatic solutions and restore the trust in multilateral conflict management mechanisms.

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Translated by Stefania Errico