The United States is expected to say later on Monday that buyers of Iranian oil need to end imports soon or face sanctions, a source familiar with the situation said, confirming an earlier Washington Post report. US crude futures gained 2.4 percent, or $1.52 a barrel, to $65.52. The global benchmark price rose as high as $74.31 earlier in the session, its highest intraday level in nearly six months. Brent crude futures increased more than 3 percent to over $74 per barrel, while United States crude futures rose about 2.33 percent to $65.49 per barrel.
The decision means sanctions waivers for five nations, including China and India and US treaty allies Japan, South Korea and Turkey, won't be renewed when they expire on May 2. The combined excess production from key Gulf allies can balance out the lost crude from Iran, he added.
Secretary of State Mike Pompeo claimed the sanctions have already cost Iran around $10 billion, as he told a press conference the USA would not grant anymore exemptions.
Iran's exports have fallen to less than 1 million barrels per day from more than 2.5 million bpd before sanctions were re-imposed a year ago.
Turkey - one of the purchasers of Iranian oil, which had thus far enjoyed an exemption from the United States sanctions - was clearly frustrated over the White House decision not to extend the waivers beyond May 2. Twenty-three of its importing countries have dropped their purchases to zero, and of the eight granted waivers in November, three are down to zero.
Energy-hungry India stands to be among the most affected by the decision and is also facing United States pressure not to buy from Venezuela, where Trump is seeking to topple leftist President Nicolas Maduro.
The prospect of reduced Iranian supply brought a cautious reaction from top OPEC exporter Saudi Arabia, a key US ally and also a driving force behind the OPEC-led supply-cut deal.
President Trump is touting his administration's move to stop granting sanction waivers to countries still making oil deals with Iran.
Asked what meaningful change the maximum pressure campaign had brought about to date in Iran's behavior, Pompeo said, "We have watched Iran have diminished power as a result of our campaign". He said the link between oil prices and the US economy has diminished as American oil production has increased. He said their cooperation, plus increasing US production, "underscores our confidence that energy markets will remain well supplied". "And what is the Trump Administration strategy toward Iran?"
Oil prices spiked after Sunday reports that the waivers would end and remained higher on Monday.
"We're going to zero", Pompeo said.
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