Pompeo claimed the administration’s Iran policy has had little impact on oil prices, despite a wealth of oil market analysis identifying the sanctions as a major driver for rising crude prices this year.
“Our laser-focused approach is succeeding in keeping prices stable with a benchmark Brent price right about where it was in May of 2018 when we withdrew from the JCPOA,” he said, referring to an acronym for the Iran nuclear deal’s official name.
It’s true that the Brent crude price today is comparable to the cost on May 8, but Pompeo’s analysis glosses over significant volatility in the interim, and ignores that oil prices rose in anticipation of the U.S. withdrawal from the nuclear deal.
In the month prior to Trump’s announcement, the cost of crude ran up about $7 a barrel, hitting 3½-year highs. Oil prices traded in a range until September, when they began a rally to four-year highs as traders braced for potential oil shortages following the sanctions.
Prices have since backed down to their lowest since April following a punishing October sell-off in global financial markets, weakening oil demand forecasts and increases in output from OPEC, the United States and Russia.
International benchmark Brent crude is up nearly 9 percent this year, while U.S. crude has risen more than 4 percent. Higher crude costs have heaped financial pain on oil importing countries with weakening currencies, including India, Argentina and Turkey.
Mnuchin said the list of blocked entities will total roughly 700 when the final sanctions information is released on Monday. That includes hundreds that were granted sanctions relief under the 2015 nuclear deal, as well as roughly 300 additional entities.
The Treasury secretary also sought to clarify the U.S. position on SWIFT, the financial messaging system that facilitates transactions around the world.
Mnuchin said SWIFT could be subject to sanctions if the system facilitates transactions for designated Iranian financial institutions. The United States is telling SWIFT to disconnect any of those designated institutions as soon as possible, he added.
The SWIFT system will be allowed to facilitate transactions with non-designated entities for certain humanitarian goods like medicine and food, Mnuchin said. However, he warned that the United States would sanction banks that facilitate illicit transactions masquerading as humanitarian trade.