Iran nuclear deal: What's the fallout from US 'hard exit'?

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President Donald Trump pulled the US out of the Joint Comprehensive Plan of Action (JCPOA) on Tuesday evening, without offering an alternative to an agreement which lifted sanctions on Iran in exchange for Tehran limiting its nuclear program.

The 2015 deal between Iran and six world powers – China, Russia, France, Britain, Germany and the US – was working, other signatories insisted, and Tehran was in compliance with the terms.

Read more: Trump pulls US out of deal

Reaction: World responds to US withdrawal

Explainer: What is the Iran nuclear deal?

But Trump complained that the "horrible one-sided deal" did not address Iran's ballistic missile program, its nuclear activities beyond 2025 or its role in regional conflicts. He announced all US financial sanctions waived under the JCPOA would be reinstated in a hard exit – though the penalties cannot be imposed immediately, potentially leaving the door open to a compromise.

The US president argues that economic pressure will force Iran to renegotiate the terms of the deal – despite Tehran insisting it will not do so. Critics warn violating the multilateral agreement damages US credibility and risks further instability in the Middle East.

What could happen next?

1. Is a new deal possible?

Trump has cast his decision as a move to pull Iran back to the negotiating table, with the aim of forcing a broader agreement than the JCPOA through economic pressure – an approach he believes has been successful with the Democratic People's Republic of Korea (DPRK).

French President Emmanuel Macron has previously suggested a "new deal" could be sought, but Iran has shown little willingness to renegotiate. Iranian President Hassan Rouhani said the US move was "illegal, illegitimate and undermines international agreements," accused the US of "psychological warfare" and vowed not to "allow Trump to win." US and European diplomats are believed to be continuing talks over possible solutions.

2. Does the JCPOA have a future?

The JCPOA is a multilateral deal, and the US violation does not end it. Rouhani said Iran remained committed to the JCPOA "if we achieve the deal's goals in cooperation with other members."

Much may depend on the consequences of renewed US sanctions for foreign companies wanting to do business in Iran. If Tehran no longer receives economic benefits, it has little incentive to keep to the terms of the deal. The European signatories have urged the US not to make life more difficult for the countries that want to stick with the agreement.

3. How isolated is the US?

Trump made the call to pull out of the JCPOA against the wishes of all other signatories and against the advice of many allies. It has delighted Israel, Saudi Arabia and the United Arab Emirates, but dismayed traditional allies in Europe.

The move has undoubtedly strained relations with Britain, France and Germany, with very public attempts to lobby the US president falling flat and splits already open over trade and climate change.

Former US president Barack Obama warned on Tuesday, "the consistent flouting of agreements that our country is a party to risks eroding America’s credibility, and puts us at odds with the world’s major powers.”

4. A sign of things to come?

Trump's tough stance on the Iran deal follows the appointment of two hardline advisers – Mike Pompeo as secretary of state and John Bolton as national security adviser. Defense Secretary Jim Mattis and former secretary of state Rex Tillerson had defended the deal and were viewed as constraints on the US president's instincts. The "hard exit" could herald a more muscular follow-up to Trump's rhetoric on foreign policy.

5. Will there be further sanctions?

The reinstated US sanctions are targeted at the Iranian central bank and Iranian businesses and individuals in key industries, such as finance, oil and shipping.

The sanctions block new contracts being signed immediately and phase out existing deals over 90 or 180 days. Penalties will be applied to companies that don't comply, although waivers can be requested. US sanctions could also be applied to countries that don't reduce oil purchases from Iran.

The measures endanger existing deals and are likely to hit foreign investment and trade with Iran. Bolton said on Tuesday that it was "entirely possible" that the US would impose fresh sanctions on Iran.

6. What will the impact within Iran be?

Rouhani, who struck the 2015 deal, was elected as a moderate willing to open up to the West in order to boost Iran's economy. The US withdrawal may embolden hardliners within the country, especially if the sanctions are strictly applied to oil exports.

Hardliners have campaigned against the JCPOA and may press for the nuclear program to be revived. Trump's warning that Iranians deserve better than their current "dictatorship" may also heighten suspicions that hawkish American officials are seeking regime change.

7. Will the region be destabilized?

Iran and Israel are already engaged in action against each other in Syria. British Foreign Secretary Boris Johnson has warned the US withdrawal could lead to a "dash for a bomb" in the region.

Jake Sullivan, a US diplomat, involved in brokering the JCPOA, told the Financial Times that Trump’s decision increased the likelihood Iran would return to its nuclear program and raised the risk of regional confrontation between Iran, Israel and Saudi Arabia. "Right now neither Donald Trump nor his team have a strategy; they have an attitude,” he said.

8. Impact on Korean Peninsula?

The US willingness to go back on an agreement signed in 2015 may be closely watched in Pyongyang, with the US president soon to meet DPRK leader Kim Jong Un to discuss denuclearization on the peninsula.

Former US secretary of state John Kerry said Trump's decision "breaks America's word." There are echoes of the "maximum pressure" approach to the DPRK pushed by the US over the past year, which the White House credits for bringing Kim to the negotiating table.

9. Will oil prices rise?

Renewing sanctions makes it much harder for Iran to sell its oil abroad, potentially limiting supply and increasing prices. Iran pumps about 3.8 million barrels per day of crude or just under 4 percent of global supply, according to Reuters. However, oil prices have already risen in recent weeks as a result of uncertainty over the deal.