President Donald Trump’s decision to replace his secretary of state with a more hawkish figure should have been bullish for oil prices since it increases the probability the nuclear deal with Iran will be abandoned in May.  Failure to recertify the deal could lead to the re-imposition of secondary sanctions and pressure from the United States on other countries to reduce their purchases of Iranian crude again.But the decision to replace the secretary of state barely registered on the spot price of Brent crude and the six-month calendar spread continued to soften, suggesting that traders see little impact for the moment.

 In theory, failure to recertify could remove hundreds of thousands of barrels of crude from the market and cause a significant tightening of the supply-demand balance.For the time being, however, the Trump administration’s increasingly hawkish position on Iran has not been enough to offset the impact of increased supply from shale.Crude traders may be under-estimating the president’s determination to end what he has termed a “terrible” deal and ratchet up the pressure on Iran.

But the president and his new secretary of state, assuming the nominee is confirmed by the U.S. Senate, will still face the same diplomatic constraints in ending the deal and renewing the boycott of Iranian oil.European countries, including Britain, France, and Germany, are no more eager than before to abandon the nuclear deal or re-impose broad economic sanctions.Russia is also unlikely to cooperate since relations and cooperation with the United States are at the lowest ebb since the end of the Cold War.