Leaving the Iran nuclear deal relates to security, not oil, says ex-Saudi Aramco exec

Key Points
  • Sadad Al-Husseini, former executive vice president of Saudi Aramco, says Trump's decision to leave the Iran nuclear deal is about "security in the region" — not oil.
  • Oil supply and distribution will be impacted, he says.
Trump has taken a very courageous position: Dr. Sadad Al Husseini

President Donald Trump's plans to leave the Iran nuclear deal are about security, not oil, a leading Saudi oil and gas expert told CNBC on Tuesday.

"I don't think this is about oil at all," said Sadad Al-Husseini, a former executive vice president of Saudi Aramco, Saudi Arabia's national petroleum and natural gas company.

"This is about security in the region," Al-Husseini said on "Closing Bell." "This is about confronting a problem that's been with us for many years."

"You just can't keep running the Middle East the way it has been, with tragic wars and surprising conflicts and attempts to subvert governments left and right, all coming out of Tehran," said Al-Husseini, who is now president of Husseini Energy, an energy investing company he founded.

"The Iranian people deserve a much better government," he said.

The nuclear agreement lifted sanctions on Iran. In exchange, the country agreed to limit its nuclear program.

Earlier Tuesday, Trump announced the U.S. would withdraw from the deal and restore sanctions on Iran — a move that would be detrimental to Iran's economy, cut its oil exports in half and effectively sever it off from the rest of the global financial system.

"We will be instituting the highest level of economic sanction," Trump said in a televised address Tuesday. "Any nation that helps Iran in its quest for nuclear weapons could also be strongly sanctioned by the United States. America will not be held hostage to nuclear blackmail."

Some critics argue that Trump's announcement could fracture relationships with allies and possibly damage the flow of oil in the region.

But Al-Husseini called the president's move "a brave one," and a "realistic position to take."

"I don't think oil is going to change much," he said. "There's an abundant supply of physical oil. And the markets are well-saturated around the world."

"I don't really expect there will be a significant loss," he said. "You have plenty of inventory still."

Al-Husseini did acknowledge, however, that the 400,000 to 500,000 barrels of oil that Iran exports to Europe might be affected.

But, he said, "the rest of the oil goes to the Far East, to China, to India, some to [South] Korea, and those are unlikely to get affected."

On Tuesday, U.S. West Texas Intermediate crude oil settled down $1.67, or 2.4 percent, at $69.06 a barrel. International benchmark Brent crude fell 47 cents , or 0.6 percent, to $75.71.

Analyst on Iran deal decision: The risk of war is part of the equation going forward

"The market right now is narrowly focused on when the barrels will roll off," Helima Croft, managing director and global head of commodity strategy at RBC Capital Markets, Tuesday said on "Closing Bell"

"[I'm] thinking the impact will be pretty minimal," she said. "But I do think there's a broader Middle East fear-premium that could be returning to the market."

Frederick Kempe, president and CEO of the Atlantic Council, a foreign policy think tank, said the risk of war is also part of the equation.

"We're in new territory," Kempe said Tuesday on "Closing Bell." "This was the most important decision of the Trump Administration to date."

"Will the Iranians be willing to negotiate? Will the Europeans be willing to negotiate?" he said. "Where do we go from here? I don't know."