Oil under pressure from rising output, but Iran sanctions loom

02 November, 2018, 17:40 | Author: Rachel Logan
  • Will Iran’s oil exports fall to zero

The United States said on Friday it will temporarily spare eight jurisdictions from US Iran-related sanctions, allowing them to keep importing Iranian oil after US economic penalties come back into effect on Monday. Indian public refineries like Mangalore has also been buying Iranian oil but not in the numbers that they were earlier. "Iranian hospitals are already starting to report medical shortages as a result of financial sanctions that make banks reluctant to handle Iranian transactions".

Senior US State Department officials working on the Iran issue are said to have convinced Secretary of State Mike Pompeo to permit Iran to remain connected to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) global banking system, Washington Free Beacon reported, citing the sources familiar with the matter.

The concessions to Iran are said to include oil waivers to China, South Korea, and India, all of which purchase Iranian crude oil.

Despite these efforts, analysts said any potential Iranian oil sanction waivers would likely only be temporary.

Turkey's Energy Ministry said on Friday it had heard rumors of waivers but added it had not received written notification of any exemption on buying Iran oil after the United States reimposes sanctions on Tehran on 5 November. At a U.N. Security Council meeting in September, Trump defended his administration's decision to pull out of the Obama-era deal, and blasted what he called a "horrible, one-sided deal [that] allowed Iran to continue its path toward a [nuclear] bomb and gave the regime a cash lifeline when they needed it the most".

President Donald Trump withdrew from the deal in May, describing it as "defective at its core".

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The administration has said it is considering waivers on a case-by-case basis.

"We will continue to discuss our Iran policy with our counterparts around the world and the implications of our re-imposition of sanctions previously lifted or waivered under the JCPOA", he said. After the latest round of U.S. sanctions was announced, HPCL was the first Indian refiner to halt purchases from Iran after its insurer backed out. "There is much more that it's going to need to do", he said.

"But the people should know with certainty that the government has no fear of American threats".

On the other hand, it's unclear whether the United States would grant any waivers, with U.S. Administration officials giving mixed signals.

The Indian side, while building its case for a waiver, assured the U.S. that this payment mechanism ensures Iran can't use oil money from India for any terror-related activity, a key American concern.

With Saudi Arabia pumping out 10.65 million bpd so far in October, combined output from the top three oil producers is now higher than ever, at 33.41 million bpd, meaning that Russian Federation, the United States and Saudi Arabia alone meet more than a third of the world's nearly 100 million bpd of crude oil consumption. Iran used the funds to buy goods from India. Iran could mix its oil with crude from neighboring Iraq, sell on the black market or try a barter system supported by the European Union.

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