Trump trades barbs with Iran as new round of sanctions looms

DUBAI (Bloomberg) -- Tensions between the U.S. and Iran escalated as President Donald Trump prepared new sanctions and told Tehran it’s “playing with fire,” prompting Iran to respond that it won’t be bullied. The deterioration in relations came as the U.S. prepared to punish Iran for testing a ballistic missile on Sunday. As many as 17 entities connected with Iran’s missile work and up to eight linked to terrorism will be named under penalties as early as Friday, according to two people familiar with U.S. strategy.

The Trump administration has adopted a hard line on Iran since taking power on Jan. 20, banning its citizens from entering the U.S. and accusing the nation of interfering in the affairs of the U.S.’s regional allies in the Middle East. While such an approach could satisfy hawks in Washington who were never comfortable with former President Barack Obama’s tentative rapprochement with Iran, it could also unsettle domestic Iranian politics where President Hassan Rouhani is hoping for re-election in May.

New sanctions

The new sanctions aren’t designed to take aim at Iran’s nuclear program, according to the people familiar with Washington’s plans. Under that agreement, signed with six countries including the U.S. and Russia, Obama eased some restrictions in exchange for Iran’s promise not to develop nuclear weapons. While the missile test didn’t contravene that deal directly, it may be seen as going against a U.N Security Council resolution that enshrines it.

Ending Iran’s international isolation has paved the way for the country to increase oil exports, one of the reasons the price of crude has been depressed in the past year and a half. The latest round of U.S.-Iranian tensions reverberated in oil markets on Friday as futures headed for a third weekly gain.