Gas Prices Climb As US Moves To End Iran Exemptions

April 23, 2019 - 1:08 pm

NEW YORK (WCBS 880/AP) — Global oil prices struck 2019 highs after the U.S. moved to impose sanctions on countries that purchase oil from Iran.

Analysts believe the prices will continue to climb and already states like New York and California are feeling the impact.

“We’re looking at removing probably, something like 1.3 million barrels of oil from the market,” said Tom Kloza, chief oil analyst at the Oil Price Information Service. “There may be some play in some of the countries that would argue that they need the crude oil. But, essentially the State Department said, ‘we're gonna go to zero. We want to bring Iran to its knees and that means pushing their exports to zero.’”

Since the U.S. does no import Iranian oil, it’s expected that the price of crude oil will be moving higher over the course of the next 90 days, according to Kloza.

And while the price of gas typically increases at this time of year, the policy change is expected to cause them to increase even more, especially in traditionally red states, Kloza said. He speculates that support for President Donald Trump may waiver in those areas as voters feel the direct impact of the Trump administration’s decisions.

“He’s been very conscious of his base and that base tends to be an awful lot of people who live, you know, paycheck to paycheck, where gasoline can be a big part of their income, or the cost of gasoline,” Kloza said.

He didn’t expect prices to near $3 per gallon in areas such as Pennsylvania, Michigan, Florida and Indiana, but says it looks like it will happen after all.

The U.S. announced the sanctions last year to push Iranian leaders to renegotiate an agreement aimed at keeping them from developing nuclear weapons. But some countries got temporary waivers that allowed them to import Iranian oil. The U.S. now says those waivers expire May 2.

Among those affected are China, India, Japan, South Korea and Turkey. U.S. Secretary of State Mike Pompeo said Monday the U.S. is counting on ally Saudi Arabia to ensure sufficient supply.

Already, New York Mercantile Exchange has risen 10 cents to $65.65 per barrel and international Brent crude rose 14 cents to $74.18 per barrel.

(© 2019 WCBS 880. The Associated Press contributed to this report.)