Following reports by the United States Secretary of State Mike Pompeo that the United States will end waivers on countries currently receiving Iranian oil exports caused an almost three percent spike in oil prices on Monday.
Global benchmark Brent Crude increased to more than $74 per barrel as US benchmark West Texas rose to $65.71 per barrel, a 2.67 percent increase as reported by the Associated Press.
Oil prices spiked to the highest since November after reports that countries receiving waivers on Iranian oil imports will eventually end.
“Today I am announcing that we will no longer grant any exemptions,” said Pompeo in a briefing. “We are going to zero. We’re going to zero across the board.”
The US had previously granted sanction waivers to eight economies including China, India, Greece, Italy, Taiwan, Japan, Turkey and South Korea.
Washington wants to push Iran to stop funding militant activities in the Middle East with the new sanctions.
The amount of oil exports from Iran has already fallen below 1 million barrels per day (bpd) compared to compared to over 2.5 million bpd prior to sanctions being re-imposed approximately a year ago.
“The sanctions (are) obviously one of the major movers, I think, which is influencing prices,” said the head of portfolio management at the financial services company Reyl Singapore, Daryl Liew, adding that India will probably be the most affected country due to their current deficit.
The Organization of Petroleum Exporting Countries (OPEC) members including Saudi Arabia have dramatically cut exports in recent months. Analysts fear that sanctions by the US will leave the world with an inadequate supply of oil.
The Syrian government is already facing a severe shortage of gas as the country has not received oil from Iran since October due to the US placed sanctions.
