The price of oil hit six-month highs after the Trump administration announced it was ending waivers for Japan, South Korea, Turkey, China and India to buy oil from Iran, prompting Tehran to threaten to close the Strait of Hormuz, a vital waterway for global oil shipments.
“If we are prevented from using it, we will close it,” the head of the Revolutionary Guard Corps navy force said in a report by the state-run Fars news agency. “In the event of any threats, we will not have the slightest hesitation to protect and defend Iran’s waterway.”
Secretary of State Mike Pompeo plans to announce Monday that the administration will not renew sanctions waivers for the five countries when they expire on May 2, three U.S. officials said.
It was not immediately clear if any of the five would be given additional time to wind down their purchases or if they would be subject to U.S. sanctions on May 3 if they do not immediately halt imports of Iranian oil.
The officials were not authorized to discuss the matter publicly and spoke on condition of anonymity ahead of Pompeo’s announcement.
The decision not to extend the waivers, which was first reported by The Washington Post, was finalized on Friday by U.S. President Donald Trump, according to the officials. They said it is intended to further ramp up pressure on Iran by strangling the revenue it gets from oil exports.
U.S. officials now say they do not expect any significant reduction in the supply of oil given production increases by other countries, including the U.S. itself and Saudi Arabia.
Iranian officials have threatened to close the waterway in the past amid rising tensions. The Strait of Hormuz is a narrow waterway in which a fifth of the world’s oil supply passes through.
The U.S. says it will move to stop any Iranian attempt to close the waterway.
China opposes Washington’s “unilateral sanctions and long-arm jurisdiction,” said a foreign ministry spokesman, Geng Shuang. He said Beijing’s dealings with Iran are “reasonable and legitimate.”
China, which relies on imports for about half of its oil, could present the toughest diplomatic challenge in trying to enforce the Trump administration’s ambition of driving down Iran’s oil exports.
Beijing has supported global efforts to curb the spread of nuclear weapons technology. But it rejects unilateral U.S. action and previously opposed linking trade to Iran’s nuclear program.
The communist government will “protect the legitimate rights” of its companies, Geng said. He gave no indication what China might do if Washington goes ahead with sanctions.
Futures in London jumped as much as 3.3% to the highest intraday price since November after rising for four weeks. The U.S. will announce pricing offsets through commitments from other suppliers like Saudi Arabia and the UAE.
The Associated Press contributed to this report.