Iran can’t seem to get a break, at least as far as the U.S. is concerned. Yesterday, Sigal Mandelker, undersecretary of the Treasury for Terrorism and Financial Intelligence, told reporters in Singapore that Washington placed additional “intense pressure” on Iran this week.
“It’s very important that these countries [Malaysia, Singapore, and others] have important visibility into the different ways the Iranian regime uses to deceive the international community in connection with shipment of oil,” Mandelker said. She added that she would stress the inherent risks in dealing with Iran in meetings over coming days with government officials in Malaysia, Singapore, and India.
“This trip follows on the heels of additional intense pressure we have placed on Iran. In just the last week, we took action against nuclear scientists and agencies and other key personnel involved with the Iranian regime’s past nuclear weapons entities,” Mandelker said. “We are making them radioactive to the international community.”
She added that action taken so far this week was also against a network involved in an Iranian sanctions evasion scheme, that includes Iran, the UA, and Turkey-based front companies. She added that the U.S. was also bringing “maximum pressure” on the Venezuelan government of President Nicolas Maduro.
Trump’s bulldog foreign policy approach
Mendelker’s comments come at a precarious time for President Donald Trump. On the one hand, he has been arguably successful using a tougher stance internationally than any of his predecessors dating back to the Reagan administration from 1981-1989.
Trump’s tough trade actions against China, for example, which has had sought bipartisan support in Washington, is bearing fruit and forcing Beijing to consider once thought non-negotiable systemic changes in how it does business, including claims of intellectual property rights theft and state support for its business sectors. In Venezuela, tough Trump action and fresh sanctions are hitting the government of Nicolas Maduro hard, particularly its ability to earn petrodollars, likely ushering in its demise. Trump’s Iran policy is also hitting Iran so hard that its currency and economy are still floundering amid popular unrest, especially among younger Iranians.
On the other hand, these foreign policy decisions could also haunt the president as the 2020 election cycle nears. Due to Trump’s tough stance against Iran and Venezuela, both major OPEC producers, ongoing support under oil prices is persisting. The loss of Iranian and Venezuelan barrels from global markets, along with the success of the current OPEC+ oil output deal is driving up oil prices near $70/barrel – a price point that Riyadh has indicated it is comfortable with. On Friday morning, oil prices for both London-traded global benchmark Brent, and U.S.-benchmark, NYMEX-traded West Texas Intermediate (WTI) crude futures were on track to post their largest first quarter in a decade, during the onset of the global financial crisis. During the first quarter of 2009, both oil benchmarks gained around 40 percent.
WTI futures were at $59.56/barrel at 0211 GMT, up 26 cents, or 0.4 percent, from their last settlement. WTI futures are set to rise for a fourth straight week and are set for a whopping first-quarter gain of 31 percent. Brent crude oil futures, for their part, were up 30 cents, or 0.4 percent, at $68.12/ barrel. Brent futures are set to increase by 1.7 percent for the week and are set to climb by 27 percent for the first quarter.
Trump’s murky waters
The danger for Trump is that higher oil prices translate to higher gasoline prices, putting the president in the crosshairs of voters, particularly swing voters or those undecided, that could vote their pocketbooks next year instead of party loyalty. The national average price of gas hit $2.69 on Thursday, up 28 cents from a month ago and up 9 cents from a week ago, according to AAA. California has the highest average price in the nation at $3.57, according to AAA. Alabama is the cheapest at $2.41.Related: IMO2020: Can We Expect Extreme Price Shocks?
Moreover, RBOB gasoline futures are surging 42 percent so far this year, a development that has prompted the president once again to turn to influence OPEC production. On Thursday,Trump tweeted “Very important that OPEC increase the flow of Oil. World Markets are fragile, price of Oil getting too high. Thank you!”
However, it’s unlikely that OPEC, moreover OPEC’s de facto leader Saudi Arabia, will comply with Trump’s tweets for mercy in global oil markets any time soon. The last time the Saudis complied with the president’s wishes, albeit via Twitter also, they were caught flat-footed when he issued several waivers for Iranian oil – a development that still disappoints the Saudis. This time, the president may be on his own when trying to sway global oil markets, and that proposition is not comforting for Trump supporters as 2020 nears.