Washington has granted eight Iranian oil importers waivers from the sanctions that enter into effect next Monday, among them Japan, South Korea, and India, a government official told Bloomberg. Another two sources told Bloomberg China was also on the list but discussions with the U.S. were still ongoing.
The waivers are temporary, the source also said, with Washington expecting the countries on the list will gradually reduce their imports of Iranian crude, the ultimate goal still being cutting to zero the country’s exports to stifle its main source of revenue. However, S&P Global Platts yesterday quoted the chairman of India’s largest oil company, the Indian Oil Corporation, as saying cutting imports to zero was unrealistic and it would harm the market.
Iran has been making the same argument ever since President Trump announced the sanctions. Besides threats to close off the Strait of Hormuz, Tehran said there is simply not enough spare capacity in the world to make up for lost Iranian supply, which would mean price spikes that would not be to the liking of Washington or its allies whose energy industries need more oil than they can produce themselves. Related: U.S. And OPEC Flood Oil Market Ahead Of Midterms
The list with the countries selected for waivers will be announced officially on Monday, the day when the sanctions snap back. In addition, Washington has asked its partners to reduce trade in other goods, not covered by the sanctions, with Iran to maximize the pressure.
Iran, meanwhile, is preparing. Earlier this week media reported that President Rouhani had replaced the economic team of the government and that four cargoes of crude were sold on the Iranian energy exchange. The amount is not great at less than 300,000 bpd, but it could be the start of something regular. At the same time, Tehran is seeking ways to strengthen its relationship with partners including China, India, and the European Union.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com: