President Donald Trump's attempts to weaken Iran financially could drive average U.S. gas prices past $3 per gallon, analysts have warned.
As part of continuing efforts to isolate Iran economically, the Trump administration announced on Monday that countries importing Iranian oil could face sanctions from the United States. The White House said it intended to completely end Iran's oil exports.
"U.S. consumers could be staring down a $3 per gallon national average now, at least for a time as we get into the start of the summer driving season. That's going to hit consumer confidence," John Kilduff, a partner at Again Capital, a hedge fund focusing on energy derivatives, said Monday on CNBC's Squawk Box.
Secretary of State Mike Pompeo said, "The goal remains simple: to deprive the outlaw regime of the funds it had used to destabilize the Middle East for four decades and incentivize Iran to behave like a normal country."
In November, when the U.S. reimplemented sanctions on Iran after the withdrawal from the Joint Comprehensive Plan of Action—commonly known as the Iran nuclear deal—the Trump administration said it would temporarily exempt eight countries from sanctions and allow them to buy Iranian oil. On Monday, the U.S. announced it would no longer honor that exemption. The decrease in available oil could continue driving oil prices up, potentially costing Americans billions of dollars, Patrick DeHaan, head petroleum analyst for tech company GasBuddy, told CNBC.
The president tweeted that "Saudi Arabia and others in OPEC will more than make up the Oil Flow difference in our now Full Sanctions on Iranian Oil."
Gas prices in the U.S. have risen for nine straight weeks, according to the American Automobile Association. Last month, gas prices were an average of 23 cents less per gallon. Gas on the West Coast is significantly costlier than throughout the rest of the country, and prices in California were far above the national average, costing an average of $4.03 per gallon. In Hawaii, the second-most-expensive state for gas in the country, gas sold for an average of $3.59 per gallon. The cheapest gas has been found in the South, with Alabama registering the nation's lowest average of $2.50 per gallon.
Despite the recent upswing across the U.S., the average price of gas across the nation had only increased about 10 cents per gallon from a year ago, according to an analysis from GasBuddy.
Iran was exporting 2.5 million barrels of oil per day in April 2018, before Trump announced that the U.S. would be withdrawing from the Iranian nuclear agreement later in the year. The country was exporting between 1.0 and 1.1 million barrels per day in March, Reuters reported.
Venezuelan oil exports have also dropped since the U.S. levied sanctions in January. The crisis-hit country, which was exporting between 1.47 and 1.66 million barrels per day before the sanctions, was only shipping 920,000 barrels per day at the end of February.
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Daniel Moritz-Rabson is a breaking news reporter for Newsweek based in New York. Before joining Newsweek Daniel interned at PBS NewsHour ... Read more
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