French President Emmanuel Macron called up United States President Donald Trump to say he’s very worried about tensions in the Middle East after Trump’s decision to withdraw from the Iran nuclear accord.
Macron’s office said the two leaders spoke on Saturday and the French leader expressed his “great concern about stability” in the region. Macron strongly opposes Trump’s pullout from the 2015 global deal curbing Iran’s nuclear activities.
Macron and Trump also discussed trade issues. European governments are scrambling to save billions of dollars in trade with Iran that resumed thanks to the 2015 accord.
A raft of major European companies have been investing in and trading with Iran since the lifting of sanctions in 2015, including France's Total, Danone, Peugeot and Airbus. Germany, meanwhile, accounts for 60 percent of European investment in the Islamic Republic, according to Reuters.
Italy’s energy giant ENI sees disruption ahead for oil markets thanks to the reimposition of the sanctions on OPEC's third-largest oil producer.
"The impact is more for the crude oil price, because Iran now is exporting about 2.6 million barrels (per day), and if we go back to the first sanctions, they were exporting 1.5 million," ENI’s CEO Claudio Descalzi told CNBC's Hadley Gamble on the sidelines of the ADNOC Downstream Investment Forum in Abu Dhabi on Sunday.
When sanctions were imposed by the Barack Obama administration on Iran in 2012, Iran's oil exports dropped to approximately 1.5 million barrels per day (bpd).
Since the export restrictions were lifted in 2015, as part of the multilateral deal that offered economic relief in exchange for curbs to Iran's nuclear program — formally known as the Joint Comprehensive Plan of Action (JCPOA) — that figure increased by more than 1 million.
Trump announced on May 8 that the US would leave the deal, immediately sending oil prices into a tailspin.
"So there is a lack of 1 million in the market and that is going to impact the oil price, and also the balance of different crudes," the CEO said. "Because 1 million is going to Europe, the rest to the Far East."
Waivers sought for buying Iran crude
The vast majority of Iran's oil exports, more than 1.5 million bpd, goes to China, India, Japan and South Korea. Already Japan and South Korea have signaled they will try to seek waivers from the US to continue buying Iranian crude.
"We have a demand that is increasing 1.6 to 1.7 million bpd yearly average, so that is going to create a disruption in terms of cost and price," he added. "And when we have this kind of situation, the landscape becomes very uncertain."
Some analysts, however, predict the impact will actually be minimal, particularly in comparison to Obama's 2012 sanctions — they say Trump could reduce Iran's oil shipments by 300,000 to 500,000 bpd, far short of the 1 million to 1.5 million bpd that were cut from the market six years ago.
Descalzi also said that price uncertainty ahead means uncertainty for investors, particularly those looking at long-term, multi-billion dollar projects like those required for the extractives sector.
Asked if he thought Trump's decision was ill-judged, the CEO pointed to its impact on Europe and stressed his hope for a diplomatic solution.
"In any case Europe is still in agreement, so I think that diplomacy can find some solution, because Europe is the strongest ally of the US and the main impact of the Iran sanctions is going to Europe, as the impact of the Russian sanctions is going to hit Europe," Descalzi said.
"So we have a double effect, and I think that sooner or later some discussion has to be taken seriously."
The US sanctions would seek to penalize any country or entity doing business with Iran, leading France's Finance Minister Bruno Le Maire to accuse Washington of behaving like "the economic policemen of the planet."
All of the JCPOA's signatories besides the US — Germany, France, the UK, Russia and China—have pledged continued commitment to the deal.
AP, Reuters and cnbc.com contributed to the story.