Placing strict new measures on Iran’s crude exports—and surprising the market in the process—President Donald Trump helped oil prices rally to a near six-month high on Tuesday. When the current administration announced an extension to sanction wavers for a half-dozen-or-so countries that import oil from Iran the market responded with rejoicing. Essentially, this decision will mean that any country (or company, for that matter) who is caught purchasing oil barrels from Iran, after May 1, will bear the risk of triggering the new US sanctions; and these measures are designed to deprive any oil revenue to Iranian leadership.
And with that, prices for US West Texas Intermediate crude settled up 75 cents, at $66.30. That is a bump of only 1.1 percent, but enough of a boost to close at its highest level since October 29. The US benchmark had, at one point, risen to as much as $66.60, which is actually the best intraday price since October 31.
In addition, Brent crude futures posted up 53 cents, at $74.57 per barrel in the early afternoon. This is an international oil benchmark had risen, earlier, to its highest value since November 1st, at $74.73.
All in all, it appears that Brent crude futures had a 3 percent surge while WTI saw a bump of 2.7 percent from the previous session.
Now it is important to note that this very same administration has issued waivers to eight countries when restoring the Iran sanctions, in November. This would allow only these eight countries to purchase a limited quantity of crude oil from Iran’s energy industry. Only five of these permitted countries took advantage of the waivers: China, India, Japan, South Korea, and Turkey.
These waivers, then, allowed a total of 1.4 million barrels per day of crude to flow from Iranian stockpiles to one of the listed countries. That is markedly down from the 2.5 million barrels per day Iran sold last year. Of course, this new US policy could threaten to completely eliminate most of this supply during an already tightened time in the oil market; and, of course, some analysts expect that some countries might simply defy the ultimatum.