US Reimposes Sanctions on Iranian Oil After Hormuz Attacks, Prices Soar By 5% After Announcement

The United ‌States on Tuesday re-imposed sanctions on Iranian oil as a US official warned that Iran’s attacks on vessels in the Strait of Hormuz were “wholly unacceptable” and would be met with consequences. Oil prices were up more than 5% following the announcement.

Washington’s move came after three tankers reported being struck by unknown projectiles in and near the Strait of Hormuz in recent days, the British navy-affiliated agency UKMTO said in a report. There was no immediate comment from Tehran, or any claim of responsibility.

The attacks and the US response threaten to put the diplomatic understanding between Washington and Tehran on shaky ground, raising the risk that further retaliation could derail negotiations over a broader agreement. However, negotiators continued to work in good faith toward a final agreement with Iran despite the latest escalation, the US official said.

Oil prices had steadily fallen after US-Iran MoU

The US Treasury had authorised last month Iran oil sales until August 21 as part of the fragile agreement between Tehran and Washington. Tuesday’s revocation cuts that wind-down period to an end date ⁠of July 17. Oil prices had fallen steeply since the agreement was struck last month.

Any prolonged disruption could push up energy prices and increase pressure on consumers and governments already facing higher ⁠fuel costs.

Oil exports remain a critical source of revenue for Iran, providing billions of dollars in hard currency that help fund government spending and support an economy weakened by years of U.S. sanctions.

Despite restrictions, Tehran has managed to expand shipments in ⁠recent years, largely to China, making oil sales one of the country’s most important economic lifelines.

(With agency inputs)