US Reinstates Iran Oil Sanctions, Oil Prices Jump
Synopsis
The move follows attacks on tankers in the Strait of Hormuz, with crude prices rising as markets assess the impact on global supply.
US has restored sanctions on oil from Iran-effectively pulling the plug on an exemption that had permitted a modest volume of Iranian crude after attacks near the Strait of Hormuz pushed oil prices higher.
The U.S. has reduced the wind-down for approved Iranian oil deals to July 17 from the previous August 21 deadline set under a temporary deal agreed in June.
The decision followed three commercial vessels including a liquefied natural gas (LNG) carrier struck by unknown objects in the vicinity of the Strait of Hormuz, United Kingdom Maritime Trade Operations (UKMTO) said. There was no immediate claim of responsibility for the attacks.
Oil Prices Gain as Supply Risks Mount
Brent crude traded above $76 a barrel following the announcement, and the benchmark West Texas Intermediate gained as investors weighed potential disruptions to energy shipping routes in the Persian Gulf.
The rebound was largely driven by the re-emergence of fears for the security of one of the world’s most important oil-supply routes, not a change in the physical supply itself.
In 2024, the Strait of Hormuz saw movement of about 20 million barrels per day of oil and related liquids, representing approximately 20% of the global consumption of petroleum liquids, according to the U.S. Energy Information Administration (EIA).
It also serves as a primary pipeline for liquefied natural gas exports from Qatar, so any closure would affect energy prices in Europe, North America and Asia.
Temporary Respite Wanes
Washington granted an initial waiver to sanction-related activity June 21 as part of an interim diplomatic agreement to allow the limited delivery, output and sale of Iranian oil pending the completion of further negotiations.
Although talks with Iran still proceed, the attacks on commercial shipping are unacceptable, said a U.S. Official.
The strait connecting the major oil-producing states Saudi Arabia, Iraq, Kuwait, United Arab Emirates, Qatar, Iran and major consuming nations including China, India, Japan and South Korea is of significant interest to businesses in the U.S. And Australia, which will watch how price and freight markets fare.
Source: Reuters
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Pooja Malik is a business journalist with over six years of experience covering startups, entrepreneurship, and emerging trends. She has previously worked with leading media platforms such as YourStory Media and BW BusinessWorld, where she reported on business, policy, and market developments. Currently, she serves as Editor at The Inspirepreneur Magazine, where she writes and edits stories across business, lifestyle, and travel, with a focus on clarity, accuracy, and reader relevance.
