In an executive memorandum issued to the Secretary of State, Secretary of Treasury and Secretary of Energy, the president said that after considering several factors such as the level of supply in the international market and in the U.S. he decided to hit Iran in the pocketbook.
“There is a sufficient supply of petroleum and petroleum products from countries other than Iran to permit a significant reduction in the volume of petroleum and petroleum products purchased from Iran by or through foreign financial institutions,” he said in the memo.
The move will cause a major shift in global supply lines with many of Iran’s customers looking elsewhere for petroleum products and boost the price of crude to levels not seen in recent years.
West Texas Intermediate (WTI) was up to $71.09 just after the memo went public and Brent Sea crude was over $78.
Trump promised to reinitiate sanctions after leaving the Iran nuclear deal. The U.S. decided not to recertify the deal that limited sanctions because Iran had negotiated in bad faith and was continuing to fund terrorism and conflict in the middle-east.
The inflationary pressure comes just ahead of the summertime driving season in the United States.