Iran nuclear deal: What the agreement means for Canadian oil, trade and travel

Click to play video: 'President Trump announces U.S. will withdraw from Iranian nuclear deal'
President Trump announces U.S. will withdraw from Iranian nuclear deal
ABOVE: President Trump announces U.S. will withdraw from Iranian nuclear deal. – May 8, 2018

The historical Iran nuclear deal may have reached its ending after U.S. President Donald Trump announced his decision to pull out of the agreement on Tuesday, according to reports.

Trump has long criticized the 2015 deal, which imposes restrictions on Iran’s nuclear program in exchange for the lifting of most of the U.S. and international sanctions against it.

READ MORE: Donald Trump to withdraw from Iran nuclear deal, reports say

On Tuesday, hours before Trump was expected to make the announcement, Prime Minister Justin Trudeau urged the president not to pull his country out of the deal, saying that an Iran with nuclear weapons poses risks to the world.

“I hope the JCPOA (Joint Comprehensive Plan of Action) stays in place,” Trudeau said Tuesday. “I certainly hope we’re able to continue to keep on the path to preventing Iran from developing nuclear weapons.”

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WATCH: Iran president warns of ‘problems’ as Trump decision looms

Click to play video: 'Iran president warns of ‘problems’ as Trump decision looms'
Iran president warns of ‘problems’ as Trump decision looms

Canada was skeptical of agreement

In 2012, Canada abandoned its diplomatic ties with Iran and closed its embassy in Tehran. Former Canadian minister of foreign affairs, John Baird, cited Iran’s support for the Assad regime during the Syrian Civil War and non-compliance with United Nations resolutions on its nuclear program.

When the Iran nuclear deal was created in July 2015, former Canadian prime minister Stephen Harper was skeptical of the agreement between Iran and the P5+1 nations (US, UK, France, China, Russia and Germany).

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Trudeau praised deal

After Prime Minister Trudeau was elected in October 2015, he promised to restore ties between Iran and Canada. He has also praised the Iran nuclear deal, calling it a “great outcome.”

In 2016, the federal government lifted sanctions on Iran in accordance with the agreement’s terms. It allowed Canadian companies to do business with Iran, but still had restrictions on exports relating to nuclear goods and technology that could help Tehran develop ballistic missiles.

“We are pleased with results that quiet diplomacy and international negotiation have led to,” Trudeau said. “Iran’s significant movement towards respecting international expectations are a very positive sign.”

Price of oil could rise

Canada is among the top-10 oil producers in the world and any change to the oil market could have an effect on our economy.

Now that Trump has pulled out of the Iran nuclear deal, the price of oil could shoot up,, Scotiabank said in a statement last week. And higher oil prices mean greater production by the U.S. and Canada.

WATCH: Will the Iran deal affect Canada’s oil industry?

“All indications point to President Trump abrogating the arrangement and reintroducing sanctions,” the bank noted.  “At issue to world markets is the risk of a further energy shock and instability across the Middle East that may not stop at an oil shock.”

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Even the threat of the U.S. walking away from the agreement had impacted oil prices. On Monday, the price of the North American oil benchmark topped US$70 a barrel for the first time in more than three years.

However, Ryan Hurl, an assistant professor of political science at the University of Toronto in Scarborough, said if Trump does slap more sanctions on Iran, Canada probably won’t immediately feel the effect.

“There are various steps Saudi Arabia can take to respond. Any changes can open up other options, he said. “We’re not going to see an immediate disaster.”

The last time the United Nations imposed similar sanctions on Iran in 2006, the price of oil shot up from US$60 to US$145, according to Scotiabank, although there were more factors at play.

In an interview with CNNMoney, OPEC Secretary General Mohammad Barkindo said that any factor that “prevents the smooth running of the oil industry will not be in the interest of the global economy.”

“Whatever extraneous factor that affects supply or demand, will no doubt send the market into disequilibrium, which is not in the interest of producers, or the interest of consumers,” he said.

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WATCHLifting of Iran sanctions could further fuel oil’s slide, loonie drop

Click to play video: 'Lifting of Iran sanctions could further fuel oil’s slide, loonie drop'
Lifting of Iran sanctions could further fuel oil’s slide, loonie drop

International trade

New sanctions could make it risky for international companies to continue working in Iran due to potential ramifications. But Hurl said a fallout of the Iran deal would only immediately affect European nations that run a lot of business in Iran.

“There could be ripple effects into Canada, but really it won’t have a significant impact on us yet,” he said.

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Can Canadians travel to Iran?

There is nothing stopping Canadians from travelling to Iran, but you should do so with “a high degree of caution,” according to the government.

Canada shut down its embassy in Tehran in 2012 and ordered all Iranian diplomats out of Ottawa.

READ MORE: Canada’s list of risky travel spots around the world

The Canadian government has also warned that tourists heading to Iran may be closely watched by Iranian authorities.

“Seemingly innocuous behaviours, such as the use of cameras in public places, travel beyond well-established tourist attractions or casual interactions with Iranian friends, may be misinterpreted and may lead to investigation. Canadians, particularly dual Canadian-Iranian citizens, may be arbitrarily questioned, arrested and detained,” the government stated.

Iranian Canadian Congress

On Monday, the Iranian Canadian Congress released a statement, asking the Trudeau government to “publicly express its firm commitment” to the Iran deal, “and to work with European allies to ensure the survival of the Iran Nuclear Deal regardless of the course of action that the Trump Administration may take in undermining this historic agreement.”

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