“The Trump administration and our allies are determined to sustain and expand the maximum economic pressure campaign against Iran to end the regime’s destabilizing activity threatening the U.S., our partners and allies, and security in the Middle East'
President Trump announced Monday that he will put a stop to exemptions for countries that are still buying oil from Iran, the world’s fourth biggest oil producer.
Gasoline prices have already reached as high as $4.70 a gallon in some parts of California, according to the American Automobile Association. “The Trump administration and our allies are determined to sustain and expand the maximum economic pressure campaign against Iran to end the regime’s destabilizing activity threatening the United States, our partners and allies, and security in the Middle East,” the White House said Monday.
Last year, when the first rumors broke about sanctions, they caused a surge in oil and gasoline prices. The national average at the start of the year was just $2.23 a gallon. Early Monday, the price of West Texas Intermediate crude oil increased by nearly $2 per barrel to nearly $66. Jim O’Sullivan, chief economist at High Frequency Economics, a U.S.-based economic research consultancy, says each $10 rise in crude oil adds about 24 cents to a gallon, and 0.3 percentage points to the official Consumer Price Index.
The price reactions have been muted because markets think Iranian oil will still find it’s way to market, just as it did during the hostage crisis of 1979-1980. —James Bianco, head of Bianco Research James Bianco, head of Bianco Research, warns that oil and gasoline prices will shoot a lot higher if the market starts to believe the sanctions will actually work.
Bianco says higher oil prices are a net positive for the U.S. economy, because the U.S. is now on a par with Saudi Arabia as an oil producer. U.S. oil output has roughly doubled in 10 years, he says, from around six million barrels a day to 12 million barrels a day.
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