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The United States intends to impose sanctions on all customers of Iranian oil, including China, the EU, and Russia, Treasury Secretary Steven Mnuchin said on Thursday, signaling that the U.S. will be working to cut off Iran’s access to the oil market.
“It is our intent to enforce sanctions on Iran-related-oil against everybody, including China,” Secretary Mnuchin said in his testimony before the House Financial Services Committee.
Oil prices jumped two weeks ago, after the U.S. said that it would look to get Iranian oil exports “down to zero” when sanctions return in early November. The U.S. also said that it may refuse to issue waivers, but later clarified that position saying that it would “work with those countries importing Iranian crude oil to get as many of them as possible down to zero by Nov. 4.”
“We are prepared to work with countries that are reducing their imports on a case by case basis. We are serious about our efforts to pressure Iran to change its threatening behavior,” a State Department official said two weeks ago.
Secretary Mnuchin’s Thursday comments are the clearest sign yet that the United States plans to seek drastic a reduction of Iranian crude oil exports by imposing sanctions on those who continue to buy Tehran oil after the U.S. sanctions return.
Earlier this week, a Senior State Department Official said that U.S. State Department officials had visited Saudi Arabia to coordinate stronger pressure on Iran and discuss ways to ensure that the oil market is well-supplied after U.S. sanctions on Iran’s oil kick in.
The tough U.S. line on Iran’s oil exports has had analysts raise their oil price forecasts, predicting that more oil will be removed from the market at a time when global spare capacity is shrinking as Saudi Arabia and Russia opened the taps to compensate for supply disruptions elsewhere and to cap upsides in oil prices that could destroy demand.
Last week, Morgan Stanley lifted its forecast for Brent Crude by $7.50 to $85 a barrel for H2 2018, while Bank of America warned that a complete cut-off of Iran’s oil could result in oil prices jumping to more than $120 a barrel.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.