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The Trump administration is banking on being able to curtail Iran’s oil export revenue as much as possible, while hoping that the impact on the oil market will be limited by Saudi Arabia being able to release additional supply. Trump officials say it is seeking to maximise pressure on Iran until it returns to the negotiating table.

However, many of the political demands the Trump administration has on Iran, which go well beyond the nuclear issue, are unlikely to be conceded by the Islamic Republic, meaning that a long standoff is on the cards.

The US may be satisfied with simply keeping Iran distracted by domestic economic problems if oil markets remain assured that Saudi Arabia and others can minimise the impact of lost Iranian barrels. But supply losses elsewhere, such as in Venezuela and Libya, make this strategy risky in terms of increasing the chance of higher oil prices that will impact global economic growth. Indeed, Brent crude is already approaching $75. In the meantime, European powers will find it more difficult to persuade Iran to stick to the nuclear agreement that the US has walked away from.