US Reinstates Sanctions on Iranian Oil Sales After LNG, Oil Tanker Attacks

Washington: The United ‌States on Tuesday re-imposed sanctions on Iranian oil, as a U.S. official warned that Iran's attacks on vessels in the Strait of Hormuz were "wholly unacceptable" and would be met with consequences.

Oil prices were up more than 5% following the announcement. The U.S. Treasury had ​authorized last month Iran oil sales until August 21 as part of the fragile agreement ​between Tehran and Washington. Tuesday's revocation cuts that wind-down period to an end date ⁠of July 17.

The U.S. move came after three tankers reported being struck by unknown projectiles in and ​near the Strait of Hormuz in recent days, the British navy-affiliated agency UKMTO said in a report. ​There was no immediate comment from Tehran, or any claim of responsibility.

The U.S. official said negotiators continued to work in good faith toward a final agreement with Iran despite the latest escalation.

The attacks and the U.S. response threaten to put ​the diplomatic understanding between Washington and Tehran on shaky ground, raising the risk that further retaliation could ​derail negotiations over a broader agreement.

Another U.S. official, speaking on condition of anonymity, said initial indications were that Iran ‌had fired ⁠at three commercial vessels.

The Strait of Hormuz, a narrow waterway between Iran and Oman, is one of the world's most important energy choke points. Roughly a fifth of global oil and liquefied natural gas shipments passed through the strait each day before the war.

Any prolonged disruption could push up energy prices and increase ​pressure on consumers and ​governments already facing higher ⁠fuel costs.

Oil exports remain a critical source of revenue for Iran, providing billions of dollars in hard currency that help fund government spending and support an ​economy weakened by years of U.S. sanctions.

Despite restrictions, Tehran has managed to expand ​shipments in ⁠recent years, largely to China, making oil sales one of the country's most important economic lifelines.

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