Economy
Oil Market Soars as Trump Plans New Secondary Sanctions on Iran
By Adedapo Adesanya
The oil market went up on Thursday after US President Donald Trump threatened new secondary sanctions on Iran, sparking Brent crude futures to rise by $1.07 or 1.8 per cent to $62.13 a barrel and the US West Texas Intermediate (WTI) crude futures to gain $1.03 or 1.8 per cent to trade at $59.24 a barrel.
President Trump said all purchases of Iranian oil or petrochemical products must stop and any country or person buying any from the country would be immediately subject to secondary sanctions.
Secondary sanctions happen where one country seeks to punish a second country for trading with a third by barring access to its market.
“They will not be allowed to do business with the United States of America in any way, shape, or form,” he wrote on his social media platform, Truth Social, on Thursday.
The American president’s comments follow the postponement of the latest US talks with Iran over its nuclear programme, which had been due to take place in Rome on Saturday.
This is the latest punishment targeted at Iran following a series of sanctions on entities including a China-based crude oil storage terminal and an independent refiner it has accused of being involved in illicit trade in oil and petrochemicals.
In February, President Trump restored his maximum pressure campaign on Iran which includes efforts to drive its oil exports to zero and help prevent the oil producer from developing a nuclear weapon.
Iran, a member of the Organisation of the Petroleum Exporting Countries (OPEC), could see up to a reduction in supply of about 1.5 million barrels barrels per day, if this happens.
Meanwhile, OPEC and its allies, OPEC+ are set to suggest the group accelerates output hikes in June for a second consecutive month.
Eight OPEC+ countries will meet on May 5 to decide a June output plan.
Saudi Arabia may be unwilling to prop up the oil market with supply cuts and can manage a prolonged period of low prices.
On the demand side, the US economy contracted for the first time in three years in the first quarter, indicating worries about the impact of President Trump’s trade policy.
