US ending Iranian oil waivers sends crude oil prices soaring

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The U.S. announced Monday that it will not extend waivers to buy Iranian crude oil for five countries --Turkey, South Korea, China, India and Japan -- when those waivers expire in early May.

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The announcement, made by Secretary of State Mike Pompeo, reflects the White House goal of getting Iranian oil exports to zero and was couched as a way of supportinng.

"We want the Iranian people to know that we are listening to them and standing with them," he said.

Crude oil prices promptly jumped more than 2 percent to more than $65 per barrel for the first time since November on concerns about how the U.S. termination of Iranian oil waivers will affect global supply.

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In early trading Monday, West Texas Intermediate, the benchmark American crude, climbed to $65.45, a 2.27 percent jump, its highest level since Oct. 31, 2018.

"The United States, Saudi Arabia, and the United Arab Emirates, three of the world’s great energy producers, along with our friends and allies, are committed to ensuring that global oil markets remain adequately supplied," the White House said Monday in a statement.

"The Trump Administration and our allies are determined to sustain and expand the maximum economic pressure campaign against Iran to end the regime’s destabilizing activity threatening the United States, our partners and allies, and security in the Middle East."

President Trump tweeted that the U.S. and other big oil producers will more than make up for any loss of Iranian oil.

It was not immediately clear if any of the five nations would be given additional time to wind down their purchases or if they would be subject to U.S. sanctions on May 3 if they do not immediately halt imports of Iranian oil, according to The Associated Press. The other two countries are China and India.

The U.S. had previously granted eight nations a 180-day waiver to keep buying Iranian crude oil provided that they take steps to cut purchases and eventual end them altogether. Price increases are expected to continue.

“I think it’s pretty clear that tightening supplies and receding fears of demand growth is a boost to the market to these 5-month highs,” Gene McGillian, Tradition Energy vice-president of market research in Stamford, Conn., told Reuters.

Concerns about global oil supplies also stemmed from the effect of American sanctions against Venezuela and civil unrest in Libya.

Rising crude oil prices are boosting the prices of petroleum products, which are refined from crude oil. The average U.S. price of regular gasoline jumped 13 cents a gallon over the last two weeks to $2.91. California is being hit the hardest by the tightening supply: As of late last week, the average gasoline price in the state was about $4.02, according to AAA, compared with the national average of $2.83.

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Those are the highest prices California has seen since 2014. Prices have risen around 68 cents per gallon over the course of a month.

According to Dan McTeague, a senior petroleum analyst at GasBuddy, it’s a supply crunch resulting from refinery upsets in Los Angeles and San Francisco.

The Associated Press contributed to this report.