The United States sanctions against Iran’s oil exports entered into full force last week as the United States attempts to cripple Iran’s oil-dependent economy and suppress their nuclear desires. Although Washington has vowed to halt all purchases of crude from Iran, it recently supplied eight countries with waivers to continue imports without penalty for the next 180 days. While President Trump views this as a way to stabilize any fear of global price spikes, Iranian President Hassan Rouhani believes the United States had no choice but to grant the waivers and Iran has publicly stated they will continue to export as much oil as needed. However, one thing to be cognizant of is, how will Iran ship their product?
Today, oil prices dropped to $83 a barrel after the United States said it is actively considering waivers on the oil sanctions against Iran, potentially easing the current strain on supply and allowing Iranian oil exports to keep flowing.
Crude prices have been surging the last few weeks with the expected loss of Iranian supply beginning November 4th. With that, the U.S. has been ramping up pressure on OPEC to increase production in an attempt to lower oil prices.
News was released this week announcing that the U.S. would be reinstating sanctions against Iran, specifically the Iranian government’s purchase of United States Currency (Dollar), Tehran’s trade in gold, other precious metals, and its automotive industry. President Trump stated as well that if Iran didn’t comply with the reinstatement of the first wave of sanctions that his administration would look into targeting Iran’s port industry as well as its energy shipping and ship building industries. These second wave of sanctions could ultimately have an impact on global supply as well as the worlds spare capacity cushion of oil. Sanctions against Iranian Oil will impact another player in the trade war against the U.S., China. China is the biggest buyer of Iranian crude oil and with Trump and his administration exchanging tariff blows back and forth it will be a test of time to see how long China will resist communicating with President Trump and the United States.