USA to end sanctions waivers for major Iranian oil importers

Daniel Fowler
April 22, 2019

The United States is expected to announce on Monday that all buyers of Iranian oil will have to end their imports shortly or face sanctions, according to U.S. officials.

Washington has a campaign of "maximum economic pressure" on Iran and through sanctions, it eventually aims to halt Iranian oil exports and thereby choke Tehran's main source of revenue.

In early trading on Monday, Benchmark Brent crude oil futures rose by as much as 3.2 percent to $74.30 a barrel, the highest number since November 1. Iran's biggest oil customers are China and India, who have both been lobbying for extensions to sanction waivers.

The decision means sanctions waivers for five nations, including China and India and US treaty allies Japan, South Korea and Turkey, won't be renewed when they expire on May 2.

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"The United States, Saudi Arabia, and the United Arab Emirates, three of the world's great energy producers, along with our friends and allies, are committed to ensuring that global oil markets remain adequately supplied", it said.

"Any action by the top oil exporter depends on the certainty of scrapping the waivers and its effect on the oil market", the report says.

It was not immediately clear if any of the five would be given additional time to wind down their purchases or if they would be subject to USA sanctions on May 3 if they do not immediately halt imports of Iranian oil.

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Major exporters of Iranian crude oil have received the expected United States announcement with alarm.

"Iran is not waiting for America's decision or the lack of it to export its oil", Tasnim quoted the source as saying."We have years of experience in neutralizing efforts by enemies to strike blows against our country", the source added.

"Under SREs we hope they will give us relaxation and allow us to buy some Iranian oil", the source added.

China opposes Washington's "unilateral sanctions and long-arm jurisdiction", said foreign ministry spokesman, Geng Shuang.

Government officials there declined to comment, but Kim Jae-kyung of the Korean Energy Economics Institute said the end of the sanction waivers "will be a problem if South Korea can't bring in cheap Iranian condensate (for) South Korean petrochemical makers".

Japan is another close USA ally in Asia that is also a traditionally significant buyer of Iranian oil.

Prior to the re-imposition of sanctions, Iran was the fourth-largest producer among the Organization of the Petroleum Exporting Countries (OPEC) at nearly 3 million barrels per day (bpd), but April exports have shrunk to well below 1 million bpd, according to ship tracking and analyst data in Refinitiv.

That is lower than at least 1.1 million bpd as estimated for March, and down from more than 2.5 million bpd before sanctions were reimposed last May.

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