Oil grabbed much attention on Monday as it climbed 3% to $74. Explanation: Donald Trump has decided not to renew the exemptions that allowed 8 countries to continue to import Iranian crude when they expire in 10 days. Tehran immediately responded that Washington would not succeed and threatened again to block the Strait of Hormuz, through which much of the world oil passes.
To prevent the global oil market from overheating after the US reinstated sanctions against the Iranian oil and gas sectors last November as a result of their withdrawal from the 2015 nuclear deal, Washington had granted exemptions for 6 month to China, India, South Korea, Turkey, Greece, Italy, Japan and Taiwan. These exemptions will not be renewed when they expire on May 1st. No grace period will be granted to the countries that benefited so far, Secretary of State Mike Pompeo added, formally announcing Washington’s decision.
According to the White House, Saudi Arabia and the United Arab Emirates have pledged to offset the decline in Iranian exports to ensure that world demand is met and to avoid a surge in oil prices.
The commander of the “Revolutionary Guards” navy, the elite unit of the Iranian army, has threatened to block the Strait of Hormuz if Iran is no longer allowed to sell its oil.”
On the foreign exchange market, the euro comes back to $1.1250 after the publication late last week of depressed activity indices in the euro zone, especially in Germany. The IHS Markit Eurozone PMI Composite stood at 51.3 in April after 51.6 in March, while economists forecast an improvement to 51.8. It is at the lowest for 3 months.
The latest US economic indicators were rather better, particularly retail sales in March, which reassured consumption. These sales jumped 1.6% in one month, against a consensus of +0.9%. Excluding cars, retail sales rose 1.2% in one month, after -0.2% in February and while economists expected +0.7%. Finally, excluding cars and gasoline, sales rose 0.9% compared to the previous month, against +0.4% consensus and -0.7% in February.