Rex Tillerson and Mike Pompeo. Photo: Joseph Eid, Jim Watson AFP/Getty Images

A number of analysts quickly predicted that Secretary of State Rex Tillerson's ouster and Mike Pompeo's ascendance will ensure a more aggressive U.S. posture against two major oil producers: Iran and Venezuela.

Why it matters: Beyond the security and humanitarian considerations, potential new sanctions could also alter oil markets.

“Pompeo’s selection augurs a period of higher risk and volatility in energy markets. Pompeo supports a more unilateral and confrontational approach toward Venezuela, Iran, and North Korea."
— David Goldwyn, a top State energy official early in Hillary Clinton’s tenure, to Axios
Iran

The Iran nuclear deal is hanging by a thread: In the near term, Trump is facing a May decision about whether to again waive sanctions against Iran's oil sector, and has signaled he won't sign another waiver absent changes to the nuclear agreement. But winning them is an uphill climb.

  • "[I]t is unlikely that Congress or the Europeans will take any meaningful action to modify the agreement. As a result, there is significant risk of snap-back US oil sanctions on Iran on May 12, and the nuclear deal remains on life support," Joseph McMonigle of Hedgeye Risk Management said in a note.

He believes Trump's decision to replace Tillerson "surely signals the end" of the nuclear deal. Reimposing the sanctions could take up to one million barrels of Iranian crude exports per day off of global markets, he said.

However, the figure would be lower unless other U.S. allies also renew penalties, which appears unlikely.

The fallout:

  • McMonigle notes that re-imposing U.S. sanctions would "inject significant geopolitical instability in oil markets."
  • RBC Capital Markets' Helima Croft, in a note yesterday, said renewed U.S. sanctions would likely "curb the enthusiasm" of European and some Asian companies to invest in Iran oil production," among other effects.
  • Bloomberg Gadfly's Liam Denning makes a similar point here. He says solitary U.S. measures might not take any Iranian barrels off the market, but adds: "America pulling out of the deal might cause foreign oil companies such as Total SA of France to think twice about committing more investment in Iran (ironically, Russian oil companies might well step in if others step back)."
Venezuela

It's another place to watch as plunging oil production has fueled an economic and humanitarian crisis.

Expand chart
Reproduced from EIA; Chart: Axios Visuals

Check out the chart above — the country's oil production plummeted in the last two years, and as EIA notes here, by January of this year it was already another 300,000-plus barrels-per-day lower than in 2017.

  • "Pompeo will likely align with more hawkish voices in the administration calling for stepped up sanctions, including those that would further restrict Venezuela's ability to export crude and further curtail the regime's revenue," Croft predicted in a note Tuesday.

Go deeper: S&P Global Platts breaks down the potential oil market and geopolitical effects of Tillerson's ouster here.

Go deeper

Trump's Tucker mind-meld

Photo illustration: Sarah Grillo/Axios. Photo: Roy Rochlin/Getty Images and BRENDAN SMIALOWSKI/AFP via Getty Images

If you want to understand the rhetorical roots of Trump's Independence Day speech at Mount Rushmore, go back and watch Tucker Carlson's monologues for the past six weeks.

Between the lines: Trump — or rather his speechwriter Stephen Miller — framed the president's opposition to the Black Lives Matter protest movement using the same imagery Carlson has been laying out night after night on Fox.

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 6 p.m. ET: 11,366,145 — Total deaths: 532,644 — Total recoveries — 6,154,138Map.
  2. U.S.: Total confirmed cases as of 6 p.m. ET: 2,874,396 — Total deaths: 129,870 — Total recoveries: 906,763 — Total tested: 35,512,916Map.
  3. States: Photos of America's pandemic July 4 ICU beds in Arizona hot spot near capacity — Houston mayor warns about hospitals
  4. Public health: U.S. coronavirus infections hit record highs for 3 straight days.
  5. Politics: Former Trump official Tom Bossert says face masks “are not enough”
  6. World: Mexican leaders call for tighter border control as infections rise in U.S.
  7. Sports: Sports return stalked by coronavirus
  8. 1 📽 thing: Drive-in movie theaters are making a comeback.

Bolton's hidden aftershocks

Photo illustration: Sarah Grillo/Axios. Photo: Justin Sullivan/Getty Images

The news media has largely moved on, but foreign government officials remain fixated on John Bolton's memoir, "The Room Where It Happened."

Why it matters: Bolton's detailed inside-the-Oval revelations have raised the blood pressure of allies who were already stressed about President Trump's unreliability.