Investing.com – U.S. President Donald Trump could be able to help assuage affordability concerns among Americans by reaching potential deals to resolve longstanding geopolitical conflicts, according to analysts at Citi.
Representatives from the U.S. and Iran are set to meet in Geneva, Switzerland, on Tuesday to discuss the Middle Eastern country’s nuclear enrichment activities, media reports showed. The talks come amid heightened military tensions in the Middle East, as the U.S. mobilizes more of its forces in the region. Trump has repeatedly threatened military action against Iran if it does not accept a U.S. deal.
At the same time, negotiators from Ukraine and Russia were also gathering in the Swiss city for two days of talks mediated by the U.S., with Trump reportedly pushing Kyiv to accept an agreement to end Europe’s biggest war since 1945. However, expectations for a breakthrough in the discussions remains muted.
The Iran and Ukraine-Russia negotiations come as Trump faces increasing calls domestically to serve up some relief from high living costs, which economists have said are squeezing lower-income American households despite resilient overall activity. U.S. inflation has remained stubbornly above the Federal Reserve’s 2% target, keeping interest rates at nearly two decade highs.
Affordability, as well as the wider economy, have in turn become major issues for voters ahead of all-important U.S. mid-term elections in November, which could dent the current control Trump’s Republicans have in Congress.
But “[o]ne channel through which the U.S. may be able to influence affordability is via peace deals between Russia and Ukraine, and via de-escalation/dealmaking with Iran,” the Citi analysts said in a note to clients.
These deals could contribute to lower prices for and ancillary products like diesel, gasoline, and jet fuel, “driving a deflationary impulse and enabling more Fed cuts than would otherwise have been the case,” the analysts said.
They added that their “base case” is for both the Russia-Ukraine and Iran deals to be reached “by or during the summer of this year,” contributing to a decline in prices to $60-$62 per barrel in Brent. Diesel and gasoline premiums may also decline, which could provide some relief at the gas pump for Americans, they added.