The Strait of Hormuz, a key strategic waterway situated between the Persian Gulf and the Gulf of Oman, is now tense. In reaction to the U.S. plan of interference, Iran has threatened to close the shipping lane vital for the world trade.
Media reports said:
Iran’s Rear Admiral Alireza Tangsiri stated on Monday that if Iran is not allowed to export oil through the Hormuz Strait, it would react immediately. “The Hormuz Strait, based on law is an international shipping route and if we are banned from using it, we will close it”, he told TV channel Al-Alam.
About 20 percent of the world’s oil and about a third of all petroleum shipped by sea passing through the Hormuz Strait.
The Irani Rear Admiral’s statement comes amid growing tensions between the U.S. and Iran.
In early-April, the U.S. blacklisted Iran’s Islamic Revolutionary Guard Corps (IRGC) as a terrorist organization. As a counter-step, Iran has officially designated the US Central Command (CENTCOM) as terrorists.
Despite earlier threats to bring Iranian crude oil exports down “to zero”, Washington granted “temporary waivers” on exports to major customers, like China, India, Italy, Japan, South Korea, Greece, Turkey and Taiwan.
Iranian media later reported that despite the US sanctions, the country’s oil revenues jumped by nearly 50 percent in 2018.
China vows to defend business amid US’ reported plans to end Iran Oil Waivers
China stands against the U.S’ unilateral restrictions against Iran and will take every effort to defend interests of national companies doing legal business with Iran, Chinese Foreign Ministry spokesperson Geng Shuang said on Monday. The Chinese official was commenting on Washington’s reported plans to scrap oil sanctions waivers.
“China opposes unilateral sanctions. Cooperation between China and Iran is open, transparent and legal. This must be respected. The Chinese government will do its best to protect the legitimate interests of its companies,” Geng said at a briefing.
Last year, the U.S. withdrew from the 2015 Iran nuclear deal and reinstated wide-ranging sanctions on Tehran. However, in early November, Washington granted six-month waivers from oil sanctions against Iran to Greece, Italy, Taiwan, China, India, Turkey, Japan and South Korea.
The U.S. wants all importers to eventually cut their oil sales from Iran to zero, which is likely to have a significant impact on the Middle Eastern country, where oil exports serve as one of main sources of budget revenues.
US to announce Iran oil sanctions waivers cancellation starting May 2
The US Department of State will announce on Monday the cancellation of sanctions waivers for Iranian oil imports.
US Secretary of State Mike Pompeo will tell journalists that starting May 2, the Department of State will no longer grant any sanctions waivers enabling countries importing Iranian oil to continue doing so.
US President Donald Trump announced last May Washington’s withdrawal from the Iran nuclear deal. This triggered the re-imposition of sanctions against Iran, previously lifted under the agreement. Two rounds of sanctions have been reintroduced since then, including large-scale restrictions covering oil exports from Iran to other countries.
Oil prices on rise amid U.S. announcement to end waivers for Iranian oil buyers
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 April 22 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 stabilized 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 stabilize 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.
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 program. Other signatories to the JCPOA slammed Washington’s decision and reaffirmed their adherence to the accord.