Oil prices saw a surge today – up a further 3 percent, following reports that Washington is set to announce an end to the sanctions waiver on Iranian oil, an announcement set for May 2nd.
As a result, Brent crude oil futures surged to over $74 per barrel, while US crude futures hit highs of $65.71 per barrel.
Countries which could be affected most by this announcement are Japan, South Korea, Turkey, India and China – all of whom will face certain pressure by the US to halt any trade in Iranian oil imports, as the US eliminates ‘sanctions waivers’ in a broader effort to strangle the Iranian economy and increase the suffering of Iranian people in the faint hope that they might then “rise up” and overthrow the revolutionary government in Tehran. Increased pressure on Tehran comes one year after Washington left the Iran nuclear deal.
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Financial Times also reported this morning…
The move is just the latest effort to ratchet up pressure on Iran. Earlier this month, the US took the unprecedented step of branding Iran’s Revolutionary Guard a foreign terrorist organisation, the first time formally labelling part of another country’s government as terrorists. The end of waivers comes as oil prices have risen sharply this year, reaching highs above $72 a barrel due to voluntary and involuntary cuts by members of Opec, the oil producers’ cartel, that have tightened supply.
[…] The market is also watching closely for further losses from turmoil elsewhere. Reducing Iran’s production capabilities “is going to make an already tight market even tighter, especially with supply risks in Libya and Venezuela”, said Jason Bordoff, a former oil adviser to Barack Obama’s administration and director of the Center on Global Energy Policy at Columbia University in New York.
Of the potential buyers of Iranian oil to be affect, India could suffer the most – with rising fuel prices sure to trigger inflationary fears in New Delhi.
Also, increased hostilities in major OPEC producer Libya are also triggering supply fears in the futures markets, as Tripoli is hit by a series of airstrikes and explosions over the weekend as Khalifa Haftar’s forces continue their march against the UN-backed administrative government in power.
“Libya is producing 1.1 million barrels per day. If things go wrong, immediately somewhere around 300,000 to 400,000 barrels per day of oil may be affected,” said Kang Wu, head of analytics for Asia at S&P Global Platts.
The FT also explains the inherent difficulty in containing China on this issue:
Few oil analysts believe the US will ever be able to completely stop Iran’s crude exports, especially to China where trade talks with Washington may complicate efforts to sever Beijing’s ties to Tehran. China had “always opposed” the US sanctions, foreign ministry spokesman Geng Shuang told reporters on Monday. “China’s co-operation with Iran has always been transparent, fair, appropriate and legal so that it should be respected,” he said.
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