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Iran Threatens To Block Key Oil Chokepoint If It Can No Longer Export Crude

Iran will block the world’s most important chokepoint for global oil trade, the Strait of Hormuz, if Tehran is barred from using it to export its oil, Navy Rear Admiral Alireza Tangsiri, Commander of the Islamic Revolution Guards Corps (IRGC), said on Monday, just as the U.S. announced that it would not be extending any waivers to Iranian oil customers.

"According to international law, the Strait of Hormuz is a marine passageway and if we are barred from using it, we will shut it down. In case of any threat, we will have not even an iota of doubt to protect and defend the Iranian waters. We will defend our prestige and embark on reciprocal acts when it comes to defending Iran's right," Iranian Fars news agency quoted Tangsiri as saying in an interview with Arabic-language al-Alam news channel on Monday.

U.S. Secretary of State Mike Pompeo tweeted early on Monday, confirming earlier reports that the U.S. planned to end all waivers when they expire in early May:

“Maximum pressure on the Iranian regime means maximum pressure. That’s why the U.S. will not issue any exceptions to Iranian oil importers. The global oil market remains well-supplied. We’re confident it will remain stable as jurisdictions transition away from Iranian crude.”

The Department of State confirmed:

“Today we are announcing the United States will not issue any additional Significant Reduction Exceptions to existing importers of Iranian oil. The Trump Administration has taken Iran’s oil exports to historic lows, and we are dramatically accelerating our pressure campaign in a calibrated way that meets our national security objectives while maintaining well supplied global oil markets.”  

Related: Trump’s Oil Waiver Decision Is A Double-Edged Sword

Brent crude rallied 2.83 percent at 11:47 a.m. EDT on Monday on the news.

Over the past year, Iran has threatened several times to close the Strait of Hormuz for all tanker traffic if the U.S. drives Iranian oil exports to zero.

The Strait of Hormuz is the world’s most important chokepoint, with an oil flow of 18.5 million bpd in 2016, the EIA estimates. Some 80 percent of the crude oil shipped through the Strait of Hormuz goes to Asian markets, the EIA has estimated using data from Lloyd’s List Intelligence tanker tracking service. China, Japan, India, South Korea, and Singapore are the largest destinations for oil moving through the Strait of Hormuz.  

By Tsvetana Paraskova for Oilprice.com

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