As promised, the European Union followed through with their promise to ban all oil imports from Iran today in an effort to halt the country’s nuclear development program. The halt on oil was accompanied by a number of other provisions including sanctions on trading with their central bank. Just days after the US, French, and British militaries sent a flotilla of warships through the gulf, the combined effect of the ban and military actions are sure to add pressure to our already tense relationship with Iran who reiterated their threat of a closure of the Strait of Hormuz. Markets responded with a more than 1% jump in the price of Brent futures, surpassing the $111 a barrel handle. Although the situation is seemingly bullish for oil, investors should remain cautious of the high exposure to headline risk.
See more here: EU bans Iranian oil, Tehran responds with threats | Reuters.