Did Netanyahu Just Say Something About Secret Nuke Files Two Weeks Ahead Of Trump’s Decision On The Iran Deal? He Sure Did!

Well, Tehran is not amused with Netanyahu’s “Iran lied big time” presentation which is pretty obviously designed to give Trump the pretext he needs to pull out of the Iran nuclear deal, a threat that’s been clouding the geopolitical landscape since the election.

May 12 is of course the day when Trump will make his decision and despite attempts by the likes of Emmanuel Macron (and other sane people) to convince him otherwise, pulling out of the agreement seems just as likely as not, especially if Trump believes doing so would bolster his poll numbers on the way to perhaps energizing the base ahead of the midterms.

For his part, Rouhani has variously deemed Trump’s allusions to negotiating a “better deal” not feasible, calling the agreement “by no means negotiable”.

This is Iran’s response to Netanyahu’s Monday theatrics:


You can go and watch the full presentation for yourself, but this is the gist of it:


Yes, “lies” and “secret files” – specifically, some 55,000 pages worth of them, related to an apparent weapons program in operation from 1999 to 2003 called “Project Amad.” Here are the bullet points:

  • Netanyahu says Iran is lying about its nuclear intentions
  • Iran moved nuclear files to secret location: Netanyahu
  • Israel has secret files from Iran nuclear plans: Netanyahu
  • Netanyahu says Israel has shared incriminating files with U.S.
  • Netanyahu says he plans to share info with IAEA as well
  • Netanyahu says U.S. has verified authenticity of files
  • Netanyahu says project had all components for nuclear weapons

So there’s that.  Apparently, the U.S. has indeed “verified their authenticity” – that according to the ubiquitous “people familiar with the matter” a crowd which, when it comes to these “secret files”, now includes everyone on planet Earth after today’s presentation.

Here’s Trump’s hot take:


Who knows if what Netanyahu is saying is true – I mean clearly, Israel is going to do whatever they can to undermine the Iranians and on the other side, I’m not sure anyone has ever accused Tehran of being the most transparent negotiating partner in the world. What we do know for sure is that Trump is a simpleton who doesn’t have a clue about any of this and he’s extremely susceptible to manipulation ahead of this key decision.

He’s got a cabinet full of war hawks and between the Syrian war bolstering Hezbollah’s regional influence and Iran effectively encircling the Sunni powers (who are now wedged between the Shiite crescent and the Houthis in Yemen), there’s going to be all manner of pressure on Trump to take a hardline approach.

Obviously, this caused a knee-jerk higher in crude:


Given all of the above and given that it comes just weeks ahead of the May 12 deadline, we thought this was an opportune time to reprint some excerpts from a piece we ran earlier this year that touches on the extent to which geopolitics has grabbed center stage for markets, whether it’s the Iran deal or the sanctions on Russia.

From “For Markets, Geopolitics Grabs Center Stage — Who’s Excited?!“…

For their part, Barclays notes that we’re back to “cold war politics.” To wit, from a summary of geopolitical events that unfolded earlier this month:

Geo-political risk heated up this week The US Office of Foreign Assets Control (OFAC) designated United Company Rusal PLC, a eurobond issuing-entity, as a specially designated national (SDN). This is significant, as US persons owning debt and equity of the entity will have to divest their holdings by May 7, 2018 under a General Licence. This unprecedented step had a significant effect on Russian asset prices, with the RUB falling by 12% against the US dollar from peak to through. The political rhetoric between Russia and the US continued to heat up throughout the week. The US, UK and France announced that they would take action in response to an alleged chemical weapons attack in Syria sanctioned by the government. And, while Russia stated that it would protect Syria from any western missile strikes, the US stated that missile strikes were a likely response to this atrocity, regardless of the threat from Russia. Such rhetoric continued to escalate rapidly and, we think suggests the risk of further political turmoil in the Middle East. The evolution of these events could influence President Trump’s decision on whether or not to extend waivers on Iran sanctions on 12 May 2018.


Note that bit there at the end about Iran sanctions. That’s got Goldman thinking about the “Bolton premium” in crude.

“The appointment of John Bolton as National Security Advisor and Mike Pompeo as Secretary of State, both vocal Iran hawks, has significantly increased the odds of the sanctions being reintroduced,” the bank writes, in a new commodities note, before adding that “the decision depends to some extent on the EU, which is currently debating introducing sanctions in response to Iran’s ballistic missile program, although so far no agreement appears to have been reached.”

What happens for crude in the event something goes awry there?  Well, on that score Goldman kind of reiterates their analysis out last year when tensions between Washington and Tehran were flaring up. To wit:

If the US reintroduces the secondary sanctions, we would expect European refiners to reduce imports from Iran, even without participation from the EU, given their exposure to the US, either through assets or product trade flows. The EU accounts for 25% of Iran’s 2.6 mb/d crude exports but we believe the key for the global oil market is whether these flows will be curtailed rather than simply redirected to Asia (see Exhibit 11). The impact of potential US sanctions on international insurance and shipping will be key to this outcome. Without the support of other countries, it appears unlikely that production would fall much and we expect that several hundred thousand barrels of Iranian exports would be initially at risk. Further, the secondary sanctions may not have an immediate impact on the oil market: they historically offered exemptions and a phase-in period and only require that countries reduce Iranian crude imports by 20% every 180 days.


Those are the technical details, but Goldman goes on to revisit the larger issue which is that between Bolton on board at the White House, Trump being increasingly unhinged (Goldman doesn’t put it that way, but everyone knows what’s going on here), and Riyadh seemingly more determined than ever to curb Tehran’s regional ambitions, the chances of an outright conflict between Saudi Arabia and Iran are elevated.

Key to the impact on the oil market would be how Saudi Arabia decides to respond. Potential losses from Iranian production would support oil prices by $7/bbl (assuming 500 kb/d outages for 6-mo, and modeling the impact of such an inventory shock on timespreads). This 10% increase in prices would halve the export revenue impact for Iran. So in this situation, Saudi Arabia may decide to increase production to prevent higher oil prices from softening the impact of the sanctions on Iran. Net, while the reintroduction of US secondary sanctions on Iran is increasingly likely, the lack of global coordination suggests a limited production impact initially. Of course, the odds of steeper military escalation in Iran have increased with the recent changes in the US administration. Further, a direct conflict between Saudi Arabia and Iran could create a dramatic impact on the oil market if local producing or refining assets were impacted.

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3 thoughts on “Did Netanyahu Just Say Something About Secret Nuke Files Two Weeks Ahead Of Trump’s Decision On The Iran Deal? He Sure Did!

  1. Nice balanced presentation. As much as I disagreed with Obama, at least he didn’t suck on Israeli dick like the other US heads, pardon the pun.

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