Whether you agree with President Donald Trump that the 2015 Iran nuclear deal was one-sided, shortsighted, and had to go, or you agree with observers who believe that walking away from it amounts to self-sabotage, the end of that deal is now a fact of life for the United States. Governments, diplomats, and military leaders will have to figure out what comes next. 

But what will it mean for your business? Even if you don't do business with anyone in Iran--most U.S. companies don't--there's a good chance your company will experience some effects of the decision. Here's how you might be affected:

1. Gasoline prices will continue to rise, at least for now. 

You've been seeing one effect of leaving the Iran nuclear deal for a while now in the form of higher oil prices, and thus higher prices at the pump. There are multiple reasons prices have been going up, but speculation that Trump would announce the U.S.'s departure from the deal was one of those reasons. Now that it's happened, oil prices have spiked to more than $70 a barrel, the highest in more than three years.

It's not clear whether the prices will keep climbing. Some predict that they will come down again as speculators see that Iran will continue selling oil, just not to the United States. In any case, Iran's oil accounts for only a small percentage of the world's oil supply. On the other hand, one theory goes, Saudi Arabia and other Middle Eastern oil-producing states may be more willing to see prices climb if Iran can't benefit. According to this view, they've allowed prices to stay low, reasoning that the more money Iran has, the more it can use to fight against their interests in the region. It's not clear whether Iran's oil sales will dwindle or not, but if they do, then Iran getting too rich will no longer be a concern.

2. Doing business with Europe could get a lot tougher.

It's easy to think of the Iranian nuclear deal as having just two parties, us and them. But in fact, the deal has several other parties: the European Union, and the other members of the United Nations Security Council besides the United States: Russia, China, France, and Britain. The United States can't kill a deal all by itself that four other nations plus the European Union are all involved in. What it can do--and what Trump has promised to do--is attempt to force the deal to collapse by also imposing sanctions on countries that do business with Iran. 

That's where things get very complicated, because the Europeans in general have said they will stick with their end of the deal and continue trading with Iran. If the U.S. imposes sanctions on them, they've threatened "blocking" legislation that would make complying with those sanctions illegal. In short: It's a mess. But it's highly possible that doing business with any company in the European Union (including, for the moment, Britain), plus China and Russia, could get a lot more difficult than it is today.

3. Oil producing nations get a windfall.

If you're a nation that produces and sells oil, then sanctions against Iran could be great news, amounting to higher prices and less competition at the same time. Needless to say, the U.S. is an oil-producing nation, so if you're in the oil and gas industry, this could be a good thing for your company. Other likely beneficiaries include Russia and Venezuela, as well as other oil-producing nations in the Middle East. If you have customers in these places, ending the Iran nuclear deal could boost your business.

Published on: May 9, 2018