Today, oil prices rose by more than 2 percent to a almost a six-month high, on increasing concerns regarding tight global supplies following the announcement of the United States of a further clampdown on oil exports from Iran.
Washington said that it will eliminate all waivers in May allowing eight economies to purchase Iranian oil without facing the sanctions of the United States.
A partner at Again Capital LLC in New York, John Kilduff, stated: “The geopolitical risk premium is back in the oil market, in a big way.”
He added: “Most, if not all, legitimate commercial interests will avoid Iran oil purchases. Iran’s flow will be reduced to a trickle.”
Brent crude futures increased by $2.07, or 2.88 percent, to settle at $74.04 per barrel. The session high amounting to $74.52 per barrel for the international benchmark was the highest since the 1st of November.
U.S. West Texas Intermediate crude futures rose by $1.70, or 2.66 percent, to settle at $65.70 per barrel. The contract hit $65.92 per barrel, the highest since the 31st of October.
Last November, the United States reimposed the sanctions on exports of Iranian oil, however, it granted waivers to eight of the main buyers of Iran: India, China, South Korea, Japan, Turkey, Taiwan, Greece, and Italy. They were allowed to keep making limited purchases for six months.
Mike Pompeo, the U.S. Secretary of State, reiterated that the goal of Washington was to bring down exports of Iranian oil to zero and said that there were no plans for a grace period beyond the 1st of May.
A senior administration official said that U.S. officials are looking for ways to prevent Iran from circumventing the oil sanctions.
Iran said that the decision not to renew the waivers has “no value,” however, citing the Foreign Ministry, Iranian news agencies reported that Tehran was in touch with its partners in Europ and neighbours and would “act accordingly.”
Another decline in exports from Iran would further squeeze supply in a tight market. The United States has also sanctioned Venezuela, an OPEC member, and the Organization of the Petroleum Exporting Countries and some allied producers including Russia have voluntarily reduced output, which has helped increase oil prices by more than 35 percent this year.