US Treasury to waive Iranian oil sanctions
Sydney (18 June)
The US Department of the Treasury will waive all sanctions on Iranian crude oil and petroleum exports – including banking, insurance, and transport sanctions – as part of an initial peace agreement signed on 18 June.
The US Government has also agreed to end all types of sanctions on Iran as part of a final deal, which is set to be finalised over the next 60 days, according to the initial agreement.
Iranian oil exports could rise because of US Treasury waivers, pushing down crude oil benchmark prices. The country exported 6.3 TJ of crude oil in 2023, down from 8–9 TJ annually between 2000 and 2011, when the US first sanctioned Iranian oil.
Lifting global sanctions on Iran may cause global oil prices to fall by about 13% over time because of increased supply, the World Bank’s Office of the Chief Economist estimated in a February 2016 research paper.
Long-term price declines linked to increased Iranian exports could be offset by new fees for importers transiting through the Strait of Hormuz. Iranian authorities have only committed to allowing ships to pass through the Strait with no charge for 60 days.
But short-term Brent crude futures prices fell to $78.57/barrel immediately after the US and Iran signed their initial peace deal. Brent crude futures traded at $72.87/barrel before the US-Israeli war in Iran began, before rising to a peak of $114.44/barrel on 4 May.
The Australian Government has welcomed the US and Iran’s initial peace agreement, but warned that it may not immediately end maritime disruptions around the Strait.
“Yesterday, I met the global head of Shell … – Sir Andrew Mackenzie – … [and] they’re concerned, as is the world, about the consequences and how long it takes for the proper reopening, and the consequences for prices that will occur,” Prime Minister Anthony Albanese said at a press conference.
“But this is a good breakthrough,” Albanese added.
By Avinash Govind