Oil Rises as US Slams Fresh Sanctions on Iran

By Adedapo Adesanya

The announcement of fresh sanctions on Iran by the United States on Thursday jerked the price of the Brent crude futures higher by $1.30 or 1.1 per cent to $119.81 per barrel with the West Texas Intermediate (WTI) crude futures leaping by $2.27 or 2 per cent to $117.58 a barrel.

With no nuclear deal with Iran in sight, the United States Treasury slapped additional sanctions on companies based in Iran, China and the United Arab Emirates (UAE) for enabling the export of Iran’s petrochemicals.

On Thursday, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) implemented new sanctions on what it called “a network of Iranian petrochemical producers” and “front companies” in China and the UAE that support Iranian petrochemical exports abroad.

“This network helps effectuate international transactions and evade sanctions, supporting the sale of Iranian petrochemical products to customers in the PRC and the rest of East Asia,” according to a statement from the Treasury Department.

The sanctions come as talks to return to the nuclear deal, which former US President Donald Trump revoked in 2018, have stalled.

The US also noted that it will continue to expose the networks Iran uses to conceal sanctions evasion activities.

Prices of the black gold had slipped more than 2 per cent after the US Federal Reserve raised its key interest rate by 0.75 per cent, the biggest hike since 1994.

It looked worsening as top economies like Britain and Switzerland also hiked rates, feeding worries about global economic growth.

The Swiss National Bank increased its policy rate to -0.25 per cent from the -0.75 per cent level it has deployed since 2015. The hike was the first increase by the country’s central bank since September 2007 while the Bank of England increased rates from 1 per cent to 1.25 per cent, the fifth consecutive rise, pushing them to the highest level in 13 years.

However, with the sanctions, the market trajectory changed.

Also, The International Energy Agency (IEA) said it expects demand to rise further in 2023, growing by more than 2 per cent to a record 101.6 million barrels per day.

There was also positivity that China’s oil demand will rebound as it eases COVID-19 restrictions.

In addition, Libya’s oil output has collapsed to 100,000-150,000 barrels per day, a fraction of the 1.2 million barrels per day seen last year. There are expectations that it could continue in the face of continued unrest.