Crude oil prices advanced nearly 4 percent in the last two days after the United States announced that it will take more measures to block Iranian oil exports. The Donald Trump administration asked nations, which import Iran’s oil, to stop their purchases or face sanction from the US. As of 12 PM, Brent crude futures were at $74.58 per barrel, up 0.7 percent from their last close and their highest level since November 2018, reported Reuters. On Monday, the international benchmark rose nearly 3 percent. US West Texas Intermediate (WTI) crude futures marked their strongest since October 2018 at $65.10 per barrel, up 0.8 percent from their previous settlement. Here are the key developments:

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* The Trump administration has announced on Monday said it will end waivers granted in November 2018 to nations buying oil from Iran. The United States reimposed sanctions on exports of Iranian oil after Trump had pulled out of a 2015 accord between Iran and six world powers to curb Tehran's nuclear program. Eight economies, including China and India, were granted waivers for six months, and several had expected those exemptions to be renewed. The White House intends to deprive Iran of its lifeline of $50 billion in annual oil revenues, Pompeo said, as it pressures Tehran to curtail its nuclear program, ballistic missile tests and support for conflicts in Syria and Yemen.

* Iran's oil exports have dropped to about 1 million barrels per day (bpd) from more than 2.5 million bpd prior to the re-imposition of sanctions. Iran’s oil production accounted for nearly 13 percent of total production by Organisation of Petroleum Exporting Countries (Opec), according to its official website.

Iran’s exports in March stood at about 1.3 million barrels a day, according to Bloomberg. Shipments were as high as 2.5 million barrels daily in April last year, before the US announced plans to reimpose sanctions on the Islamic Republic, it added.

US Secretary of State Mike Pompeo, in a briefing Monday, said "we're going to zero across the board," adding the United States had no plans for a grace period for compliance beyond May 1.

* The White House said it was working with top oil exporters Saudi Arabia and the United Arab Emirates to ensure the market was "adequately supplied". A senior administration official said President Donald Trump was confident Saudi Arabia and the United Arab Emirates will fulfil their pledges to compensate for the shortfall in the oil market. US Assistant Secretary of State for Energy Resources Frank Fannon said Riyadh was taking "active steps" to ensure global oil markets were well supplied.

Saudi Arabian Energy Minister Khalid al-Falih, in a statement on Monday, did not commit to raising production, saying it was "monitoring the oil market developments" after the US statement, and that it would coordinate with other oil producers to ensure a balanced market. OPEC is next scheduled to meet in June.

* Iran has brushed off the Trump administration's decision to stop exempting countries from US sanctions on its oil exports.

In a statement carried by the official IRNA news agency on Monday, the Foreign Ministry said: "Regarding the illegal status of the sanctions, the Islamic Republic of Iran basically has not seen and does not see any worth and validity for the waivers."

It says Iran has intensified consultations with neighbouring countries, as well as "European and international partners" on the sanctions. The ministry says a "necessary decision" will be announced later, without elaborating.

* Traders, already fretting about tight supplies, raised skepticism about whether this more stringent approach, along with ongoing sanctions on Venezuela's oil industry, could backfire in the form of a major spike in prices.

"It is a surprise that the requirement to cease importing Iranian oil should come at this next May deadline," said Elizabeth Rosenberg, director of the energy, economics and security program at Washington-based Center for a New American Security. "Having only several weeks’ notice before the deadline means there are lots of cargoes booked for May delivery. This means that it will now be harder to get it out by the deadline."

Barclays said the US push to reduce Iranian oil exports to zero will tighten crude markets significantly in the short term but is unlikely to have a big effect on prices over a longer period, Barclays said in a note on Monday. "The announcement implies material upside risk to our current $70 per barrel average price forecast for Brent this year, compared with the year-to-date average of $65 per barrel," the British bank said.

* While Italy, Greece and Taiwan already have halted purchases, doing so could prove much more challenging for China and India. Turkey, another buyer, already has slammed the US decision. "We had indicated privately that zero was coming and now we're here," a senior administration official said on Monday, referencing Turkey's concerns.

Geng Shuang, a Chinese Foreign Ministry spokesman, said at a daily news briefing in Beijing on Monday that it opposed unilateral US sanctions against Iran and that China's bilateral cooperation with Iran was in accordance with the law.

India’s Petroleum and Natural Gas Minister Dharmendra Pradhan said India will get additional supplies from other major oil producing countries to compensate for the loss of Iranian oil. Pradhan said on Twitter that India has put in place a robust plan for an adequate supply of crude oil to refineries. "Indian refineries are fully prepared to meet the national demand for petrol, diesel and other petroleum products," he said.

(With input from agencies)

First Published:Apr 23, 2019 5:41 PM IST