The US imposed harsh sanctions on the Iranian energy industry in November 2018 following its withdrawal from the Iranian nuclear deal in May. However, Washington provided waivers to several states that were actively buying Iranian oil in order for them to be able to diversify their supply sources.
Prices on the key WTI and Brent crude oil blends have sharply increased amid reports of the looming end of sanctions waivers on countries that buy Iranian oil, a move that was officially confirmed on 22 April by the White House. WTI increased by 2.34% over the course of the day, with the price at one point reaching $65.92 per barrel, but later stabilised around $65.57.
Brent rose to $73.96 per barrel after gaining 2.77%, with the price remaining more or less stable. Canadian crude showed the greatest growth, gaining almost 3% and finishing at around $52.59 per barrel. The prices spiked following media reports that Washington could soon end its waivers for Iranian oil buyers.
The move is intended to reduce Iran’s oil exports “to zero”, depriving the world market of its crude. This could result in oil prices rising significantly, as Iran is one of the biggest OPEC exporters. However, Saudi Arabia was quick to react, promising to stabilise the oil market’s prices after waivers expire by coordinating the increase to the output with other oil producers, presumably with OPEC or OPEC+ members.
On 1 May, all previously issued waivers will cease to protect recipient countries from the American sanctions that were imposed on Tehran’s energy industry in November 2018 without any grace period. Among these states are Greece, Italy, China, India, Turkey, Japan, and South Korea, as well as Taiwan.
READ MORE: Saudi Arabia Pledges to Stabilise Market as US Ends Iran Oil Waivers — Minister
The US imposed sanctions against the Iranian banking, energy, and shipping sectors after its withdrawal from the Joint Comprehensive Plan for Action (JCPOA), an agreement that saw those sanctions lifted in exchange for Tehran limiting its nuclear programme. Other signatories to the JCPOA slammed Washington’s decision and reaffirmed their adherence to the accord.