WASHINGTON/SINGAPORE: The United States is expected to announce that buyers of Iranian oil need to end imports soon or face sanctions, a source familiar with the situation said, triggering a 3 per cent jump in crude prices to their highest for 2019 so far.
Officials in Asia opposed the expected move, pointing to tight market conditions and high fuel prices that were harming industry.
The source confirmed a report by the Washington Post that the administration will terminate the sanctions waivers it granted to some importers of Iranian oil late last year.
Benchmark Brent crude oil futures rose by as much as 3.2 per cent to $74.31 a barrel, the highest since November 1, in early trading on Monday in reaction to expectations of tightening supply. US West Texas Intermediate (WTI) futures climbed as much as 3 per cent to $65.87 a barrel, its highest since October 30.
US President Donald Trump wants to end the waivers to exert “maximum economic pressure” on Iran by cutting off its oil exports and reducing its main revenue source to zero.
In November, the US reimposed sanctions on exports of Iranian oil after President Trump unilaterally pulled out of a 2015 nuclear accord between Iran and six world powers.
Washington, however, granted waivers to Iran’s eight main buyers — China, India, Japan, South Korea, Taiwan, Turkey, Italy and Greece — that allowed them limited purchases for six months.
On Monday, Secretary of State Mike Pompeo will announce “that, as of May 2, the State Department will no longer grant sanctions waivers to any country that is currently importing Iranian crude or condensate,” the Post’s columnist Josh Rogin said in his report, citing two State Department officials that he did not name.
On April 17, Frank Fannon, US Assistant Secretary of State for Energy Resources, repeated the administration’s position that “our goal is to get to zero Iranian exports as quickly as possible.”
Peter Kiernan, lead energy analyst at the Economist Intelligence Unit (EIU) said “a severe loss in (Iranian) volumes will put pressure on the supply side, given the political uncertainty currently blighting other oil exporters, such as Venezuela and Libya.” Oil markets have tightened this year because of supply cuts led by the Organization of the Petroleum Exporting Countries (Opec).
As a result, Brent prices have risen by more than a third since January, and WTI by more than 40 per cent.
Analysts said they expected the Trump administration to push Opec and its de-facto leader Saudi Arabia to stop withholding supply to calm market fears of global oil
shortages. — Reuters
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