The United States is likely to tighten the sanction enforcement on Iran’s crude oil exports over the Hamas-Israel war and the Iranian backing of Hamas, Helima Croft, the head of global commodity strategy at RBC Capital Markets, told CNBC on Wednesday.
Source: Reuters
“The Biden administration is desperate to contain this war, they clearly do not want it spilling beyond Gaza,” Croft told CNBC’s Dan Murphy on the sidelines of an investment forum in Saudi Arabia on Wednesday.
On Tuesday, U.S. President Joe Biden spoke with Saudi Arabia’s Crown Prince and Prime Minister, Mohamed bin Salman, and “discussed ongoing diplomatic and military efforts to deter state and non-state actors from widening the conflict between Israel and Hamas,” the White House said.
According to RBC’s Croft, “we just don’t know what the red lines are for a number of players in this conflict.”
Since the Hamas attack on Israel on October 7, the market has been wondering whether to price in an even tighter supply should the United States tighten the enforcement of the sanctions on Iran’s oil exports.
Oil supply from Iran, which has been rising in recent months to a 2018 high due to what appears to be weaker enforcement of the U.S. sanctions, could begin to shrink again, analysts say.
“The argument is, can you continue to allow Iran to keep the bank open for groups like Hamas? So, I think the Biden administration is going to have to tighten those sanctions,” RBC’s Croft told CNBC today.
The U.S. cannot take off the market 700,000 bpd of Iranian exports overnight, but “they could certainly do more on ship-to-ship transfers, they certainly can talk with Chinese refineries with access to U.S. capital markets,” she added.
Some stricter enforcement of the sanctions against Iran could be coming soon, because there is bipartisan Congressional pressure to “basically try to close the bank for groups like Hamas,” Croft concluded.
By Charles Kennedy for Oilprice.com
Energy News Beat