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US Sanctions Evacuated- India, China to Continue Trade with Iran; “US Will Not Impede Oil Markets”

US Sanctions Evacuated- India, China to Continue Trade with Iran; “US Will Not Impede Oil Markets”

by November 6, 2018 Energy, India, Lead, Nation, Oil & Gas

US Secretary of State Mike Pompeo on Monday notified that after snapping the sturdy nuclear deal of 2015 with Iran, the former has refurbished its sanctions against the Iranian crude oil, allowing the major importers such as India and China to continue trade with Iran for 180 days with conditions applied in order to allow smooth functioning of the global oil markets.

“More than 20 importing nations have zeroed out their imports of crude oil already, taking more than 1 million barrels of crude per day off the market,” US Secretary of State Mike Pompeo told reporters in a briefing. “The regime to date since May has lost over $2.5 billion in oil revenue.”

Pompeo said the oil waivers were issued to countries that have already cut purchases of Iranian crude over the past six months, and to “ensure a well-supplied oil market”. The exceptions are designed to last 180 days.

Having abandoned a 2015 Iran nuclear deal, US President Donald Trump is trying to cripple Iran’s oil-dependent economy and force Tehran to quash not only its missile and nuclear programmes, but also diminish its influence in the Middle East.

Earlier, Iranian President Hassan Rouhani said Iran would continue to sell its oil despite Washington’s “economic war”. Foreign minister Mohammad Javad Zarif said US “bullying” was backfiring by making Washington more isolated.

Washington has pledged to eventually halt all purchases of crude oil from Iran globally but for now it said eight countries—China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey—can continue imports without penalty. Crude exports contribute one-third of Iran’s government revenues.

Trump said he wanted to go slow on the Iran sanctions, citing concerns about causing global price spikes. “I could get the Iran oil down to zero immediately but it would cause a shock to the market. I don’t want to lift oil prices,” he told reporters before flying to a campaign event.

Iran’s exports peaked at 2.8 million barrels per day (bpd) in April, including 300,000 bpd of condensate, a lighter form of oil. Overall exports have since fallen to 1.8 million bpd, according to energy consultancy Wood Mackenzie, which expects volumes to drop to 1 million bpd.

Oil prices in October rallied above $85 per barrel on fears of a steep decline in Iranian exports. Prices have fallen since then on expectations that some buyers would receive exemptions and as supply from other big producers has increased.

In addition, US oil output hit a record high this year of about 11.3 million barrels, and sustained high output could reduce the impact of the Iran sanctions. On Monday, international benchmark Brent crude oil futures erased earlier gains to trade at $72.85 a barrel while US crude futures fell 0.4% to $62.87.

US officials have said the countries given temporary exemptions will deposit revenue in escrow accounts for Tehran to use solely for humanitarian purposes.

The sanctions also cover 50 Iranian banks and subsidiaries, more than 200 people and vessels in its shipping sector, Tehran’s national airline, Iran Air, and more than 65 of its aircraft, a US Treasury statement said.

“We’ve said for a long time: zero should mean zero,” John Bolton, White House National Security adviser told Fox Business Network in an interview. “These are not permanent waivers—no way, we’re going to do everything we can to squeeze Iran hard.”