Oil prices hit fresh 2019 highs on Monday following reports that the United States is set to announce that all waivers for the Iranian sanctions will end, and that all buyers of Iranian oil will have to find new suppliers, or face sanctions themselves. According to a report published on Sunday by the Washington Post, Washington will confirm its position on Monday and will be prepared to sanction any countries that don’t comply with its sanctions on Iran.
U.S. WTI futures were up 2.67 percent as of 1:06 p.m. HK/SIN, to $65.71 per barrel. Brent crude futures were also up 2.67 percent to $73.88 per barrel. President Trump’s decision to implement sanctions and to end them now has the express goal of putting as much pressure as possible on Iran, by obliterating its main source of income. Trump began the sanctions in November 2018 after withdrawing from the 2015 nuclear deal. At the time, Washington had granted waivers to eight of Iran’s primary customers – China, Japan, South Korea, India, Italy, Greece, and Turkey, all of which could continue purchasing oil from Iran for another six months. The exact date of the waiver conclusion is expected to be May 2. Brent prices have soared more than 30 percent since the start of the year, and U.S. WTI has increased over 40 percent.
Also pressuring oil prices was a reduction in the number of oil rigs operating in the United States last week by two rigs, Baker Hughes announced on Thursday. Likewise, continued conflicts in Libya and Venezuela have left analysts unsure about the production capabilities in those regions, which could constrict supply further.
With the current sanctions in place Iran has been exporting less than 1 million barrels per day, down from over 2.5 million barrels per day that it was exporting before the first round of sanctions.