The United States administration has expressed plans to slash Iran’s oil exports from 1.5 million barrels per day to zero through sanctions.
As the world’s fourth largest producer, Iran accounts for around 9.5% of total global oil reserves.
During an address to the Economic Club of New York yesterday, Treasury Secretary Scott Bessent released the U.S. administration’s plans to shut down Iran’s oil sector, drone manufacturing capabilities and cut off Tehran’s access to the international financial system.
The former global investment manager suggested U.S. sanctions against Iran would have the most immediate impact.
“The Iranian regime remains focused on leveraging its oil revenues to fund the development of its nuclear program, to produce its deadly ballistic missiles and unmanned aerial vehicles, and to support its regional terrorist proxy groups,” Bessent said.
“Making Iran broke again will mark the beginning of our updated sanctions policy.”
Aimed at Iran’s oil network, Trump’s sanction measures against Iran target firms, ships and individuals affiliated with companies already sanctioned by the U.S.
After launching his maximum pressure campaign on Iran, Trump has iterated plans to negotiate a nuclear deal with the country’s leaders.
Rather than applying maximum pressure on Iran, Trump’s preference is for a Verified Nuclear Peace Agreement, “which will let Iran peacefully grow and prosper,” Trump noted in a social media post earlier this week.
Markets took little time to respond to Bessent's speech with the price of West Texas Intermediate up 5 cents to close at $66.37 per barrel by while Brent gained 16 cents to settle at $69.46.
A day earlier, oil prices fell to multiyear lows following Trump’s announced tariffs against Canada, Mexico and China which spooked investors.
However, fears that economic growth will slow and crude demand will falter have been abated [for now] following Trump’s plans to suspend most new tariffs [on Mexico and Canada] for another month.
Meanwhile, earlier this week OPEC+ confirmed plans to gradually bring 2.2 million barrels per day back to the market starting in April.
In a note released yesterday, JP Morgan analysts told clients that a drop in Iranian supply was the only bullish catalyst for prices right now.
Back in 2018 during his first term in office, Trump withdrew the U.S. from the Joint Comprehensive Plan of Action nuclear deal negotiated by former President Barack Obama.
Two days after reimposing its pressure campaign on Iran through a presidential memorandum 4 February, the Treasury Department started imposing sanctions on an international network shipping Iranian oil to China.
Iran has long rejected sanctions against its oil sector and efforts to confiscate its exports as “piracy”.
