Three of the biggest oil ETFs got a boost Tuesday as the U.S. State Department ordered all crude oil buyers to slash their imports coming from Iran to zero by November or risk facing powerful U.S. sanctions.
The oil markets responded with WTI Crude Oil up 3.5% and Brent Crude was up 2.18%. United States Oil (NYSEArca: USO) was up 3.27%, Invesco DB Oil (NYSEArca: DBO) was up 1.93% and United States Brent Oil (NYSEArca: BNO) gained 2.15%.
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“The U.S. is continuing its decision to completely isolate Iran,” said Gene McGillian, vice president of market research at Tradition Energy. “They’re ringing the bell even louder. This isn’t unexpected. These people seem strident in what they want to do. What the effect is going to be is going to be the difficult thing to measure. It could point to more demand for U.S. oil.”
Trump’s Move Different to Obama
The move by U.S. President Donald Trump’s administration runs counter to former President Barack Obama’s administration to slowly phase out Iranian oil imports over many months. Obama’s administration requested Iranian oil buyers to cut their imports by 20 percent every 180 days.