26 Apr 2019: On Monday April 22, the U.S. announced that it will not extend the sanctions waivers when they expire on May 2nd. The stated objective of the Trump administration is to force Iranian crude oil and condensate exports to zero. When the U.S. withdrew from the JCPOA (Iran nuclear deal, negotiated in 2015), the objective was to reduce exports as far as possible. In November, when the sanctions were intended to go into effect, the U.S. unexpectedly granted waivers to 8 importers of Iranian crude oil and condensates until May 2019. As other producers had already raised production in anticipation of a cut-off of Iranian exports, the crude market became over-supplied and Brent prices dropped from the mid 70’s/bbl at the end of October 2018 to around $60 in January. Because of the price decline, in December 2018 OPEC+ decided to cut production again by 1.2 Million barrels per day (Mb/d) to support prices. These production cuts quickly translated to lower shipping rates as Middle Eastern exports declined. The question now is what impact the stricter Iran export sanctions will have on the tanker market?
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