Oil Price Hits Fresh 2019 High After US Ends Waivers for Importing Iran Oil

Brent, the international oil benchmark, rose 0.8 percent to $74.64 in early European trading on Tuesday, adding to gains on Monday to reach its highest level since early November.

On Monday, West Texas Intermediate (WTI), the US marker, crude futures hit their highest level since October 2018 at $65.95 per barrel before edging back to $65.89, which was still up 0.5 percent from their last settlement. On Tuesday, West Texas Intermediate increased 0.9 per cent to $66.13.

In currency markets, the Norwegian krone and Canadian dollar both rose against the US dollar as currencies of oil-exporting countries gained.

Oil prices have risen nearly 40 percent this year, as the OPEC cartel of oil producers cut production, and sanctions on Iran and Venezuela tightened supply in global markets.

On Monday, The administration of US President Donald Trump told eight countries - Japan, South Korea, Turkey, China, India, Italy, Greece and Taiwan - that they will no longer be exempt from Washinton sanctions if they continue to import oil from Iran after their waivers end in early May.

The United States granted eight oil sanctions waivers when it re-imposed sanctions on Iran after Trump pulled Washinton out of the landmark 2015 nuclear deal. The waivers were granted in part to give those countries more time to find alternate energy sources but also to prevent a shock to global oil markets from the sudden removal of Iranian crude.

The White House claimed that the US, Saudi Arabia and the United Arab Emirates would take action "to assure that global demand is met as all Iranian oil is removed from the market", while market analysts express deep doubt if the trio could make up for a loss of Iran's market share.

Reacting to Washington move, Iran announced that it considers no value and credit for US sanctions waivers, which allow importers to continue buying Iranian oil, but is in touch with European partners and neighbors to counter any adverse consequences of sanctions.

"Given the illegal nature of these sanctions, the Islamic Republic of Iran has not considered and will not consider any value or credit for waivers granted (to customers of the Iranian oil) on sanctions," Iranian Foreign Ministry Spokesman Abbas Moussavi noted on Monday.

Iran had blamed Trump for oil price hikes, but the US president has pointed the finger at OPEC and called on the oil-producing body to boost output.

In early July 2018, Iran's Governor at the Organization of Petroleum Exporting Countries Hossein Kazzempour Ardebili warned that Trump's rhetoric against the Islamic Republic will force crude oil prices to considerably increase, even to $100 per barrel.

"The world, specially the American consumers, will eventually consider Trump blameworthy for runaway oil prices in international markets," Kazzempour Ardebili said.

He also emphasized that the US president was wrong to believe that Saudi Arabia and Russia would help reduce oil prices, adding that both key global producers had little vested interest in bringing down the prices.

Kazzempour Ardebili had earlier said that Trump's pressure on international firms not to buy Iranian oil would drive prices higher and end up hurting the American economy, adding that oil should not be used as a weapon or to make political gains.

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