Issue #60a - Iran Nuclear Deal

Iran Nuclear Deal 

Related:  https://www.usatoday.com/story/news/world/2018/05/09/trump-iran-nuclear-deal-withdrawal-fallout/593490002/

With the world’s fourth largest proven oil reserves (just behind Canada), Iran is a major player in the oil & gas cartel known as OPEC.  Signed in 2015, the Iran Nuclear Deal framework re-established Iran’s access to world markets and the international banking system and with that, a whole lot of oil flooded the market. Trump’s withdrawal from the nuclear deal has affected the markets in two ways:

1- Restricting the amount of oil hitting the markets (offer) has caused oil prices to shoot up, at least temporarily while other producers slowly ramp up production.

2- Political instability causes uncertainty in the markets, specifically to companies that stood to benefit from the opening of Iranian markets.  Boeing and Airbus were hit particularly hard as they had to cancel $40billion in outstanding orders due to the sanctions that restrict international companies from doing business with Iran.

 

Impact on investors

Very little.  We have not recommended the purchase of oil and gas greater than a 2.5% exposure to energy so the direct impact is minimal.  That being said, the rising price of oil impacts the Canadian dollar which in turn reduces gains on our international investments.  However, so far this year the Canadian dollar has not followed the price of oil due to concerns over the health of Canada’s economy as well as trailing interest rates.

Innova Wealth Management is a trade name of Aligned Capital Partners Inc. (ACPI). Jean-François Démoré, as an agent of Innova Wealth Management/ACPI is registered to provide investment advice in the provinces of Ontario, Quebec, and British Columbia. Investment products are provided by ACPI, a member of the Investment Industry Regulatory Organization of Canada (www.iiroc.ca) and the Canadian Investor Protection Fund (www.cipf.ca). All non-securities related business conducted by J-F Demore as a representative of Innova Wealth Builders is not covered by the Canadian Investor Protection Fund and is not under the supervision of ACPI.


The information contained herein was obtained from sources believed to be reliable, however, we cannot represent that it is accurate or complete. This report is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell any securities mentioned. The views expressed are those of the author and not necessarily those of ACPI.

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