The U.S.' decision to pull out of the historic nuclear deal with Iran has increased risks in the Middle East, the global rating agency Fitch Ratings said in a statement on Thursday.
Fitch said the full impact of the decision will depend on the severity of the U.S. sanctions snapback, responses from Iran and other parties to the deal, as well as reactions from major powers in the region.
'Geopolitical shocks and/or a severe deterioration in domestic security are a rating sensitivity for several sovereigns in the region,' the agency said in the statement.
'Any long-term impact on oil prices, which are important drivers of sovereign and external balance sheets in the region, will also depend on several factors, including possible supply responses from OPEC countries and the U.S.,' it added.
Fitch said the U.S.' withdrawal from the nuclear deal could also shift the balance of power among the Iranian leadership, from those who want to keep the deal operational to hardline elements that favor economic self-sufficiency and who oppose President Rouhani.
In addition, Saudi Arabia and Israel may take a more confrontational approach towards Iran, and conflict via proxy groups in Syria and Yemen could also intensify, the agency said.
'Israel said on Thursday that it had retaliated to Iranian rocket attacks from within Syria with strikes on Iranian military targets in Syria,' Fitch noted.
However, the agency stressed that Iran's ability to project its own power in the region may be limited due to 'economic weakness and popular resentment at the cost of foreign conflicts, particularly in Syria.'
In the long-run, geopolitical risks in the region could increase if Iran restarts its nuclear program, 'as this would raise the possibility of direct military intervention by Israel or even the U.S.,' the statement said.
By Ovunc Kutlu in New York
Anadolu Agency
energy@aa.com.tr