According to numerous reports that cite anonymous sources, President Trump has given Secretary of State Mike Pompeo orders to announce that as of May 2, 2019, any and all Iranian oil waivers will not be renewed.
The story was first reported in an opinion piece published by The Washington Post. According to the story, the goal is to force Iranian oil exports to zero. Crude oil has risen sharply on the news, but if the US accomplishes its goal, we may be on the cusp of US $100/ barrel oil once again.
Apparently, Trump Loves the Pain
Removing around 1 million barrels from the global oil market is going to have some serious consequences. Not only is Libya looking super volatile at the moment, there are issues in oil-producing nations like Venezuela (also under Trump-led sanctions) and Algeria.
OPEC+ has been suffering through budget deficits for years due to lower oil prices, and US Shale oil is basically the reason why we aren’t seeing oil at much higher price levels.
President Trump is unlikely to convince nations like China to stop doing business with Iran, though this new move may pour gasoline on fiery trade relations between the world’s two largest economies. None of this is good for global industry, and a new round of sanctions could have massive consequences for the US economy.
Pompeo is Going to Bring the Ruckus
According to a senior State Department official, “The policy of zero Iranian imports originated with Secretary Pompeo,” and, “He has executed this policy in tight coordination with the president every step of the way. Because the conditions do not grant any more SREs have now been met, we can now announce zero imports.”
John Bolton was reportedly working on how this policy shift would be implemented, which speaks to a consensus among the Trump administration on the Iranian situation.
If these reports are true, and the globe has around 10 days to lock in oil supplies at present market rates, there could be an epic rise in crude oil prices. This all as the Northern Hemisphere is entering the warmer months, which is when most people travel by car.
President Trump & Co. are playing a dangerous game, though it is one that they seem to be used to at this point.