US tells allies to stop importing Iranian oil

Bloomberg/Fuel Fix:

The U.S. is pressing allies to end all imports of Iranian oil by a Nov. 4 deadline and doesn't want to offer any extensions or waivers as it follows through on President Donald Trump's decision to quit the 2015 Iran nuclear deal, a State Department official said.

Oil prices surged more than 2.5 percent in New York as traders digested the prospect of a much larger than expected loss of Iranian supply this winter. U.S. benchmark West Texas Intermediate surged to $70 a barrel, while Brent, the European crude benchmark, climbed to $76 a barrel.

In a briefing Tuesday, the State Department official said that while the administration wouldn't rule out waivers or extensions to the November deadline -- which Trump announced when he withdrew from the Iran deal in May -- it isn't discussing them either. Because U.S. allies from Asia to Europe have closer commercial ties to Iran than does America, many analysts expected some flexibility from Washington through waivers.

When Trump announced the U.S. was quitting the nuclear accord he warned that other nations would face sanctions unless they stopped trading with the Islamic Republic. Iran reached the 2015 agreement, which called for it to curb its nuclear program in return for the easing of sanctions, with the U.S., the U.K., France, Germany, China and Russia.

The official, who spoke on condition of anonymity, said the U.S. was planning conversations with the governments of Turkey, India and China, all of which import Iranian oil, about finding other supplies. The official said an important part of those discussions was making sure countries aren't "adversely affected" by cutting Iranian oil imports.

Iran had seen rising prices and a weakening of its currency, the rial, even before Trump's withdrawal decision, which was opposed by European allies as well as Russia, China and the United Nations. The country's central bank has since taken additional steps to ease a shortage of dollars and cushion the impact of sanctions. Last week, Iran banned the import of 1,400 foreign non-essential and luxury goods to reduce the amount of foreign currency leaving the country.

Illegal trade has persisted as Iranians seek sanctuary in foreign currency. Some official Iranian news sites reported that the dollar was selling for almost 80,000 rials last week, compared with 60,000 rials in April, according to the semi-official Tasnim News, which cited trade on the unofficial, illegal markets.
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Foreign bankers are some of the first to exit Iran as the US would deny them access to US financial systems if they stayed.  Iran is also facing internal opposition to its policies of funding Hamas, Hezballah, and the Palestinians.  Demonstrators closed markets in Tehran and shouted, "death to Hezballah, Hamas, and Palestine."  They are angry that the Ayatollahs are wasting resources propping up anti-Israel groups while Iranians do not have jobs.