Trump to cut off all purchases of Iranian oil in escalation of 'pressure campaign'

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The Trump administration is requiring all countries to stop buying oil from Iran or face U.S. sanctions, an escalation of a policy that could roil world energy markets.

“Our goal has been to get countries to cease importing Iranian oil entirely,” Secretary of State Mike Pompeo said at a press conference Monday. “We will no longer grant any exemptions. We are going to zero across the board.”

The sanctions are intended to punish nations that buy oil from Iran, after President Trump rejected the nuclear deal with Tehran last May, as a way to push the country to end destabilizing activity in the Middle East.

The United States had granted exemptions last November to countries still importing oil from Iran as a way to ease transition to other sources. Three of the eight countries that were given waivers have completely stopped purchasing Iranian oil: Greece, Italy, and Taiwan, leaving China, India, Turkey, Japan, and South Korea as the remaining customers. Those temporary exemptions were set to expire May 2 and are subject to reevaluation.

Buyers of Iranian oil will be cut off from the U.S. financial system.

“We have made clear if you don’t abide by this, there will be sanctions,” Pompeo said.

[Opinion: Trump took another important step to fully ending Iran nuclear deal, now he must finish the job]

The original decision to grant the waivers reflected the unease the Trump administration felt at the prospect of higher oil and gas prices during voting season.

But Pompeo said Monday the U.S. had received commitments from Gulf allies Saudi Arabia and the United Arab Emirates to increase oil supply to make up for lost Iranian barrels.

“They have committed to ensuring there is sufficient supplies in the markets and I am confident they will support this policy that is consistent with their objectives as well,” Pompeo said.

Trump, who has consistently prodded Saudi Arabia to help keep oil prices low, also expressed confidence the country would help.

“Saudi Arabia and others in OPEC will more than make up the Oil Flow difference in our now Full Sanctions on Iranian Oil,” Trump said in a Twitter post on Monday.

Saudi Arabia, OPEC’s de facto leader and largest producer, has been cutting production in a deal with Russia since the beginning of the year, as oil prices sunk too low for their liking late last year, in part due to the Trump administration’s decision to grant Iranian sanctions waivers.

Saudi Energy Minister Khalid Al-Falih vowed Monday to “ensure a well-balanced and stable oil market,” in response to Trump’s Iranian sanctions.

“Saudi Arabia will coordinate with fellow oil producers to ensure adequate supplies are available to consumers while ensuring the global oil market does not go out of balance,” he said in a statement.

Oil prices and, as a result, U.S. gas prices have already risen since mid-February as Saudi Arabia and Russia cut production.

Brent crude futures, the global oil price benchmark, increased to more than $74 a barrel on Monday morning in anticipation of Trump’s decision to cut off Iranian oil, the highest level since October.

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