The USA revoked on Tuesday a general license that authorized the sale of Iranian oil, as a U.S. official warned that Iran’s actions within the Strait of Hormuz were “wholly unacceptable” and can be met with consequences after attacks on tankers within the strategic waterway.
Oil prices rose greater than five per cent following the announcement. The U.S. Treasury said it might allow a wind-down period to July 17 for Iran’s oil transactions that had been allowed under the now revoked license.
The U.S. official said negotiators continued to work in good faith toward a final agreement with Iran despite the newest escalation.
The U.S. move got here after three tankers reported being struck by unknown projectiles in and near the Strait of Hormuz in recent days, the British navy-affiliated agency UKMTO said in a report. There was no immediate comment from Tehran, or any claim of responsibility.
The attacks and the U.S. response threaten to place a fragile diplomatic understanding between Washington and Tehran on shaky ground, raising the danger that further retaliation could derail negotiations over a broader agreement.
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One other U.S. official, speaking on condition of anonymity, said initial indications were that Iran had fired at three industrial vessels.
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The potential escalation comes as each side had been working toward a deal that included limits on Iran’s nuclear program and relief from some sanctions, including restrictions on oil exports.
The Strait of Hormuz, a narrow waterway between Iran and Oman, is one among the world’s most vital energy chokepoints, with roughly a fifth of world oil consumption and enormous volumes of liquefied natural gas shipments passing through every day.
Any prolonged disruption could push up energy prices and increase pressure on consumers and governments already facing higher fuel costs.
Oil exports remain a critical income for Iran, providing billions of dollars in hard currency that help fund government spending and support an economy weakened by years of U.S. sanctions.
Despite restrictions, Tehran has managed to expand shipments lately, largely to China, making oil sales one among the country’s most vital economic lifelines.
Any renewed effort to curb those exports could put additional pressure on Iran’s funds and its ability to sustain domestic programs and regional activities.