The U.S. administration is preparing to announce an end to sanction waivers for countries importing oil from Iran, Reuters reports, citing a source from Washington who wished to remain unnamed.
The report comes on the heels of another one, by the Washington Post, which also quoted a Washington official as saying, "The goal of the policy is to drive up the costs of Iran's malign behavior and more strongly address the broad range of threats to peace and security their regime presents."
Oil prices are already up 3 percent since the Washington Post report broke, and are expected to continue climbing until Washington confirms or denies the reports. Earlier updates on the topic from this month had it that Washington will seek to achieve this goal gradually to avoid a shock to the market that would cause a jump in prices.
When the current waivers expire, sources told Reuters, the next intermediate goal will be to cut Iran’s exports to below 1 million bpd, or by 20 percent from the estimated May rate. Yet the ultimate goal of bringing Iran’s oil exports to zero has not changed in any of the official updates.
Earlier this month, the U.S. special envoy for Iran, Brian Hook, told Reuters that three of Iran’s biggest oil importers had stopped buying crude in April ahead of the sanction waiver expiration, although he did not name any of the three. He noted this as part of the goal accomplished.
If the Trump administration does confirm the end of waivers, this would have wide reverberations in two main directions: the US-China trade talks and the OPEC+ production cuts.
The former would likely become harder in case of a waiver suspension, as TankerTrackers.com’s Samir Madani noted in a tweet. The OPEC+ deal, for its part, will likely end in June like Russia wants, since prices are bound to increase substantially after such an announcement. The sanction waiver would remove more than 700,000 bpd from global markets.
By Irina Slav for Oilprice.com
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