US Sanctions Iran's Hormuz Authority, WTI Strengthens
The US Treasury Department on Wednesday imposed sanctions on the Persian Gulf Straits Authority, the body established by Iran to manage the strategic Strait of Hormuz, which carries about a fifth of global oil supplies. Washington described the move as an attempt to prevent Tehran from strengthening its control over maritime trade in the region.
US Treasury Secretary Scott Bessent accused the Iranian military's latest move of "squeezing" global maritime trade and stated that the economic pressure is leaving the regime "running out of money." The US also warned that anyone cooperating with the authority risks sanctions, as they are deemed to be providing support or receiving services linked to the Iranian Revolutionary Guard Corps (IRGC).
Iran reportedly closed the Strait of Hormuz after the US and Israel launched a war against Iran on February 28. The closure and tight control of the strait have been a source of shock to the global economy, as energy markets are highly sensitive to the risk of supply disruptions and rising shipping costs.
The Iranian-established strait authority also published a map last week asserting Tehran's claims to vast swathes of waters on both sides of the chokepoint. This adds to the friction over who has the authority to regulate traffic and shipping regulations in the narrow waterway.
The oil market responded to this development with strength. At the time of writing, WTI prices were up around 1.6% to around US$89.80 per barrel, indicating the market has re-introduced a risk premium for Washington's new measures and Tehran's potential response.
5 key points:
- The US has imposed sanctions on the Iranian agency established to manage the Strait of Hormuz.
- Washington has warned that any party cooperating with the agency could face sanctions.
- The US is assessing the authority for support/services related to the IRGC.
- Iran is said to have closed Hormuz since the war began on February 28; the impact has been disruptive to the global economy.
- WTI has strengthened around 1.6% to around US$89.80, reflecting a renewed rise in the risk premium. (asd)
Source: Newsmaker.id
