Oil hits $77 but Iranian rial tumbles after Trump quits nuclear deal - as it happened

All the day's economic and financial news, as Brent crude hits $77 per barrel for the first time in three and a half years

• Introduction: Oil jumps after Trump's decision on Iran
• Brent crude has gained 3% to $77 per barrel
• Rial hits record lows
• Shares in French carmakers with ties to Iran fall
• Boeing and Airbus could lose deals
• Emerging market currencies also hit

7.53pm BST

And finally, here's Debbie Carson on today's oil price spike:

Crude oil prices rose to three-and-a-half-year highs following the news that the Trump administration revoked the nuclear deal with Iran.

Brent crude oil prices, the global benchmark, and US West Texas Intermediate rallied above $77 and $71 per barrel, respectively, in the aftermath of the announcement.

Brent Crude https://t.co/wCjyw2gfOL #oilprices pic.twitter.com/mJQooUpPwB

The rise came after the treasury secretary, Steven Mnuchin, told reporters he did not expect a major oil price hikes because other countries would increase output to offset such losses.

Although Donald Trump's decision to withdraw from the Joint Comprehensive Plan of Action was not a surprise, reinstating all US nuclear-related sanctions was more than expected, said Barclays analysts in a research note.

Related: Oil prices hit three-and-a-half-year high after US exits from Iran deal

7.34pm BST

My colleague Phillip Inman has written a Q&A about the rising oil price.

Here's a flavour:

When Iran pledged to limit its nuclear ambitions to civil energy production under the deal with the P5+1 group of world powers - the US, UK, France, China, Russia and Germany - sanctions were lifted on its oil exports, giving a significant boost to global oil supplies.

Iran is the third largest producer in the Organisation of the Petroleum Exporting Countries (Opec), which makes it a heavy hitter in the production of oil. It produces 2.5m barrels a day, equal to about 3% of global demand. Trump's threat to reimpose sanctions and effectively keep up to half of Iranian oil in the ground has hit the oil price since he was elected in November 2016. The price of Brent crude is now up 50% year on year.

Related: Why are oil prices soaring as US exits Iran nuclear deal?

6.33pm BST

The rally in oil stocks has driven Britain's blue-chip stock index up almost 100 points today.

The FTSE 100 closed 96 points higher at 7,662 tonight, a gain of 1.3%, and its highest level in over three months.

The FTSE 100 is the best performing major European index today thanks to the rally in oil stocks. The British equity benchmark has a disproportionally large exposure to the energy sector, and the pickup from BP and Royal Dutch Shell has made it the standout market in Europe. The US withdrawal from the Iranian nuclear deal has sent the oil market to new multi-year highs, and the major oil titans are reaping the rewards.

3.47pm BST

Newsflash: America's reserves of crude and refined oil have fallen sharply, sending the oil price even higher.

US crude stocks fell by 2.2 million barrels last week, according to new figures from the Energy Information Administration.

#Crudeoil US EIA Inventory LEVELS vs Same Week in Prior Years: pic.twitter.com/dtsUrnNYFC

Fresh highs for WTI crude oil weekly inventory data https://t.co/ajxWPtZ7Fz pic.twitter.com/q54w5mJ2lF

3.34pm BST

City Index point out that French oil giant Total could lose out on a valuable contract in Iran.

France's #TOTAL arguably faces biggest and possibly earliest impact from new #Iran sanctions. Planned deal to develop South Pars gas field in Persian Gulf. Has invested ~$1bn so far. $TOT NY shrs actually up 1.2% right now. Vvery likely on oil price support ^KO

3.21pm BST

3.14pm BST

The slump in the Iranian rial today is a reminder of the damage that new sanctions will cause to Iran's economy.

Here's Associated Press's take:

Many Iranians are worried about what Trump's decision could mean for their country.

The Iranian rial is already trading on the black market at 66,000 to the dollar, despite a government-set rate of 42,000 rials. Many say they have not seen any benefits from the nuclear deal.

2.54pm BST

Ding Ding! US oil company stocks are rallying in early trading, as Wall Street opens for business.

The Dow Jones industrial average has gained 107 points at the open, as New York traders shrug off Iranian worries.

Oil has been rallying for days in response to rumours that Trump would announce the withdrawal, which clearly suggests that traders believe the sanctions will further tighten global supply at a time when some of the world's largest producers have already significantly reduced inventories.

There is clearly the potential for these countries to fill the void left by the sanctions but if it aids their cause then they'll likely opt against it.

2.43pm BST

2.33pm BST

Here's our round-up of the companies who could be hurt by Donald Trump's decision to rip up the Iranian nuclear deal, from oil firms to car producers and airline manufacturers:

Related: How Trump's Iran deal exit could hit aviation, oil and car industries

2.29pm BST

The Iranian clampdown could also affect oil giant BP.

BP recently agreed to sell a North Sea gas field which it co-owns with Iran's state owned oil company. New sanctions could potentially cause that deal to unravel.

Late last year BP agreed to sell three North Sea gas fields to Serica Energy for $400m. One of the fields, Rhum, is co-owned by a subsidiary of Iran's national oil company. That means a licence is required from the US Office of Foreign Asset Control (OFAC) to allow US nationals or companies to work on it.

If Serica cannot obtain that licence because of new sanctions it faces the risk of being unable to call on US-owned companies, in the event, for instance, of a fire or oil spill, severely restricting its emergency options.

BP potentially affected by any new sanctions. Massive business in US and It co-owns the Rum gasfield in the North Sea with Iran's state owned oil company. Not huge - but supplied 4% of UK's gas demand in 2016. Depends how aggressively sanctions are imposed.

Serica entered agreement to buy BP's stake but the deal hasn't closed yet.

1.56pm BST

Britain's stock market has responded to the threat of geopolitical upheaval, by hitting its highest level in over three months.

Trump's Iranian nuclear deal pull-out and subsequent sanctions, via its impact on Brent Crude, remained the core driver of trading on Wednesday.

Though Brent couldn't quite hold above $77 per barrel, the black stuff is still trading at its best price since 2014. This propelled BP and Shell more than 2% higher apiece, gains that provided the bedrock of the FTSE's own growth.

US Opening Calls:#DOW 24463 +0.47%#SPX 2683 +0.41%#NASDAQ 6838 +0.34%#IGOpeningCall

12.53pm BST

Over in parliament, foreign secretary Boris Johnson is updating MPs about Iran.

He says that Britain has no intention of walking away from the nuclear deal (the Joint Comprehensive Plan of Action).

Related: Iran nuclear deal: UK won't walk away, Boris Johnson tells MPs - Politics live

12.49pm BST

Iranian citizens and businesses are facing fresh pain today as their currency, the rial, falls to fresh record lows.

Reuters has the details:

The dollar was being offered for as much as 75,000 rials, compared to around 65,000 just before Trump announced his decision on Tuesday night, according to foreign exchange website Bonbast.com, which tracks the free market.

Dealers in Tehran quoted similar levels on Wednesday, according to an Iranian economist outside the country who is in touch with them. One dealer said the rial had hit 78,000, while another said he had made two sales of dollars at 80,000.

BREAKING - one reliable website tracking #Iran's #currency exchange puts the rate at US$:75,000 rials - a historic low for Iranian currency and a whopping 14.5% down for the rial compared to three days ago (last two days due to uncertainty trade was almost at a halt). #IranDeal

NOTE: Traders offering significantly different exchange rate for US$ to the rial. Confusion in the market. Couple of other sources put the rate at US$:66,000. #IranDeal

12.17pm BST

Brent crude is heading towards $80 per barrel, says Ken Odeluga, market analyst at City Index.

Uncertainty over the Iranian situation, combined with speculation in the markets, are capable of "taking prices even higher in the near-term", he explains.

11.50am BST

Trump's decision to abandon the Iranian nuclear deal will have a major impact on the oil market, says City investor Richard Robinson.

The worst-case scenario, involving strict adherence and policing of sanctions, could see as much as 700kbbld removed from the market. A less disciplined approach, with ambiguous US guidance, could remove less than 200k barrels per day. Trump's rhetoric sounded fairly unambiguous.

Although Trump would have ideally liked Europe to join him in re-imposing sanctions, the eventual effect is likely to be similar. Europe currently imports between 500-600kbbld of Iranian crude and it is expected this number will drop by approximately 60%. Iranian barrels can be easily substituted for Iraqi crudes.

11.09am BST

Companies who have been dealing with Iran now risk violating US sanctions, and need to plan accordingly, says Michael Harris, director of financial crime compliance at LexisNexis Risk Solutions.

Any organisation conducting business with Iranian individuals, companies or related entities could actually find themselves subject to sanctions due to the United States' withdrawal from the Joint Comprehensive Plan of Action, and subsequent re-implementation of secondary sanctions.

With such a significant change in position from the US, it is vital that firms re-evaluate their dealings with censured entities and regularly screen their customers against the latest and most relevant sanctions lists. If not, they risk breaching sanctions, facing unprecedented fines and reputational damage, as well as repercussions for future business with the United States."

10.50am BST

US planemaker Boeing may also be unhappy with Trump's decision.

Like Airbus, Boeing has signed billions of dollars worth of deals with Iranian airlines in the last couple of years. Last night, treasury secretary Steven Mnuchin warned that Boeing and Airbus's licences to trade with Iran "will be revoked."

Boeing has about $20 billion in agreements with Iranian airlines for planes - but Trump's plan to pull out of the Iran nuclear deal puts them in jeopardy. https://t.co/LwHSw811oc

10.14am BST

Donald Trump's decision to reimpose sanctions on Iran is already hurting companies with ties to Tehran.

Shares in French carmakers Renault and Peugeot have fallen by over 1.2% this morning. They've both built links with Iran to build and sell cars, so now face being locked out again.

US Iran sanctions are hardly hitting any US companies, but aim primarily at European ones. This is a behavior with secondary sanctions that EU in the past has considered to be utterly unacceptable.

This can't be stressed enough: These sanctions Trump is reimposing are largely secondary sanctions, meaning they target European and other companies that do business with Iran. So it's not just about a diplomatic dust-up between the US and Europe. It's a financial hit on Europe.

9.49am BST

China, India and Korea could all be hit by Trump's decision.

As this chart shows, they are the biggest customers for the oil which Iran has been pumping vigorously since sanctions were lifted in 2016.

9.13am BST

Donald Trump's decision has gone down predictably badly in Iran.

MPs symbolically burned a US flag in the country's parliament this morning and chanted "death to America"

Iranian lawmakers set a paper U.S. flag ablaze today at parliament in Tehran after Trump's nuclear deal pullout, shouting, "Death to America!". Trump withdrew the U.S. from the deal on Tuesday and restored harsh sanctions against Iran. Full @AP coverage: https://t.co/MqybGfTnzr pic.twitter.com/Do4uSOxOy5

9.03am BST

Geopolitical anxiety is driving investors into the safety of the US dollar today, sending it to its highest level since December 2017.

US Dollar Index #DXY (orange) hits a year-to-date high while JP Morgan Emerging Market #EM Currency Index (white) hits a 1 year low... pic.twitter.com/u9ge5gzmN7

Lira hits new low of 4.37/$.

Central bank intervention today? pic.twitter.com/ZJfBCal59I

8.43am BST

Brent crude is continuing to rise, and just hit $77.20 per barrel for the first time since November 2014.

#OIL: After a fairly short dip immediately following President Donald Trump's decision to pull U.S. out of #Iran nuclear deal, oil has set series of new 3.5 yr highs. Latest #Brent crude peak $77.20/bbl. ^KO

8.43am BST

Trump's "very aggressive rhetoric" against Iran last night has jolted the oil market, says Lukman Otunuga, research analyst at FXTM

While it was widely anticipated that Trump would pull out of the Iran agreement, what is likely to leave a lasting impact on the markets is the threat that he would also penalize those who help Iran.

These overall risks are encouraging traders to price in some new geopolitical risk premium, and his threat can potentially be seen as a blow for U.S allies. There is a threat of Trump's stark tone questioning U.S relations with its European allies, especially given that the likes of France and the United Kingdom had appealed for Trump not to withdraw.

8.34am BST

Some major European companies will be very disappointed by Trump's decision, having signed some large deals with Tehran since sanctions were lifted under Barack Omaba.

Quartz explains:

Energy giants like Total and Royal Dutch Shell have lucrative agreements to work with Iran, while Renault has a joint venture to make 150,000 cars a year, and Franco-German plane maker Airbus has reportedly delivered just three out of 100 jets promised to Iran, in a deal worth billions....

Any European companies with a US arm that agreed a deal with Iran would now be violating US law, says Adam Smith, a lawyer at Gibson Dunn who is a former Treasury sanctions official.

8.05am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Related: Iran deal: Trump breaks with European allies over 'horrible, one-sided' nuclear agreement

The U.S. will reimpose all sanctions waived under the 2015 landmark agreement, he said, calling it "defective at its core."

As a counter, Iranian President Rouhani warned his country is ready to resume enriching uranium within weeks. In a strongly worded joint statement, the UK, France and Germany rejected Trump's decision.

With Venezuela still firmly in crisis and now Iran potentially facing sanctions, we could easily find that plus $70 per barrel becomes the new norm in a market which has already been tightened by OPEC.

Related: UK retailers suffer sharpest sales drop for 22 years in April

"The EU masquerades as a free trade organisation, but it is really a protection racket which imposes import taxes on the 93% of the world's population that is not in the EU," says Tim Martin in JD Wetherspoon trading update.