US thinks it can solve problems with sanctions
This is not only the case with nations such as Cuba and North Korea but oil producing nations such as Venezuela and Iran. The US has a policy of stopping oil from coming out of Venezuela and Iran. The US not only will not itself buy oil from these countries but takes punitive action again countries that do. While the US already blocks a considerable amount of oil from being bought by other countries it could try to cut down even more on sales. This could send the price of oil and gasoline higher.
Waivers
In early May, the waivers the US gave to some countries allowing them to keep purchasing Iranian oil are set to expire. The Trump administration is considering renewing less of them and potentially none with the ultimate goal of there being zero exports of oil from Iran. Countries such as China may not go along with such a plan.
As Iran exports about a million barrels a day taking all of that oil off the market would massively disrupt global markets. There could be political repercussions in the US as well, as gas prices price. This could also be the case in China and Russia that depend on Iranian oil to a considerable extent. OPEC will not likely make up the difference or have the inclination to do so. The US may have to face the negative reactions to controlling supply while not meeting demand which will result in a price rise in oil and gasoline no doubt.
The New York Times notes: “By pressuring China and India to end or sharply reduce oil purchases from Iran and Venezuela, American officials are seeking to cut off a key economic lifeline for what the administration considers to be two rogue nations that threaten the stability of the Middle East and Latin America. But they must do that without roiling global markets, further straining relations with China and India or raising gasoline prices in the United States.” Interesting that it is Venezuela and Iran causing all the problems not the United States.
Republican letter urges zero oil exports from Iran
In a letter on April 4, 23 Republican senators urged President Trump to immediately end all oil exports from Iran. The administration calls this “getting to zero”. It is not clear on how the US could do this with countries that refuse to agree to the US sanctions process. Texas Senator Ted Cruz claimed that Iran’s oil exports were funding the Iranian government threatening US security. US actions are clearly threatening the security of Iran and includes withdrawing from the nuclear treaty.
US Secretary of State Mike Pompeo said that the US has the objective of getting Iran to zero just as quickly as possible and the US would continue to do that.
Trump want to keep down gas prices before the 2020 elections
As summer approaches Americans will be taking to the road. Facing higher gas prices will not help Trump’s ratings. Helma Croft the global head of commodity strategy at RBC Capital Markets, and a former CIA energy analyst said: “If you want to keep gasoline prices low, it doesn’t seem like the best strategy is to put maximum pressure both on Venezuelan and Iranian exports.”
Retail gas prices in the US have been rising since mid-February.
In late February Trump tweeted urging OPEC to increase production: “Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike — fragile!” But both Iran and Venezuela belong to OPEC. Trump is taking actions that he blames others for as usual.
