The White House on Monday announced it would end sanction exemptions for Iranian oil exports, which could cause another spike in U.S. gasoline prices as crude oil prices jumped on Monday to the highest level this year.
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President Trump is looking to drive Iran's oil exports to zero by ending the exemptions to the sanctions which were granted to eight countries which buy Iranian oil. The waivers were set to expire next month.
On Monday, WTI crude oil prices increased to $65.53 per barrel. Brent crude prices rose to $73.80 per barrel on concerns about a tightening oil supply in the global market.
Crude oil accounts for more than half of the retail price of U.S. regular gasoline, so consumers could soon feel some pain, too.
Patrick DeHaan, a senior petroleum analyst as GasBuddy, told FOX Business that while gas price appreciation has moderated somewhat over the past week, that could change in the wake of the White House’s announcement.
“It could directly cause another round of gas price increases just as the national average reaches its highest level in months and points to a more painful summer at the pump,” DeHaan said. “If OPEC fails to increase output to offset the likely drop from an end to Iran waivers, expect oil prices to continue to rise for now, pulling more money from motorists’ pocketbooks.”
Trump said on Twitter on Monday, however, that Saudi Arabia and OPEC “will more than make up for the oil flow difference.”
Saudi Arabia on Monday said it would "coordinate with fellow oil producers to ensure adequate supplies are available to consumers while ensuring the global oil market does not go out of balance."
At their December meeting, OPEC members agreed to curb output by 1.2 million barrels per day for the first half of 2019, in an effort aimed at boosting prices for producers. Trump has frequently criticized OPEC over its production cuts.
Iran exported 1.4 million barrels per day during the first three months of this year, as reported by The Wall Street Journal.
Gas prices in California recently hit a five-year high, while the national average – as of Monday morning – was $2.84 per gallon. That’s about 8 cents higher when compared with the same period last year, and more than 20 cents higher than last month. The highest prices consumers have paid while Trump has been in office was in May last year, when the average price hit $2.97 per gallon. The lowest prices were seen earlier this year, when they clocked in at $2.23 per gallon on Jan. 9.
DeHaan had previously expected the national average to rise to a peak near $3 per gallon in the coming weeks before easing during the summer months.
Gas prices were among the top expenses Americans were concerned about in 2019, as previously reported by FOX Business, after drivers spent $388 billion at the pump last year.