Almost six months after Washington announced its withdrawal from the JCPOA deal, the U.S. formally re-instated sanctions on Iran as of today.
In a press conference, U.S. Secretary of State Mike Pompeo announced that the following countries have received (temporary) waivers, allowing them to continue to import Iranian crude oil.
South Korea
Taiwan
Turkey
Greece
Japan
China
India
Italy
Several other European nations that asked to be exempted did not get a waiver.
U.S. Secretary of State Mike Pompeo has also implicitly warned India and China that there would be consequences if the two countries continue to buy Iranian oil after the U.S. sanctions against Tehran went into effect today.
"Watch the Iranians. That is who really understands the actions we are taking," Pompeo told Fox News in an interview on Sunday. In response to a question about whether Washington can make sure China and India will eventually stop importing Iranian oil, Pompeo said, "Chris [Wallace], watch what we do. Watch as we've already taken more crude oil off the market than any time in previous history. Watch the efforts that President Trump's policies have achieved. We've done all of this, too, Chris, while making sure that American consumers don't suffer."
Although this is far from anything specific, the comments come a couple of days after Russia's Energy Minister Alexander Novak told the Financial Times that Russia will continue to buy Iranian crude and help Tehran sell it abroad. Because of this timing, some saw in Pompeo's words a thinly veiled warning to Russia as well. Related: Why Trump Decided To Back Down On Iran
"We believe we should look for mechanisms that would allow us to continue developing co-operation with our partners, with Iran," Novak told the FT. Russia buys Iranian crude under an oil-for-goods swap deal inked in 2014 and then resells it to other countries. When asked by the FT if there were plans to expand the volume of oil traded, Novak said Moscow will first assess the effects of the sanctions before making a decision on this.
Pompeo's comments are certainly in tune with the general sentiment in Washington, but they might not reflect the reality of the decline in Iranian exports. The latest data suggests the drop in exports between May and September has not been that great. Of course, since September things might have changed.
One thing has changed for certain: in late October, all Iranian tankers turned off their geolocation devices, the AFP reported, citing TankerTrackers.com, meaning a lot of oil could be headed abroad, but this won't become immediately evident. If this becomes evident, it would certainly undermine the upbeat mood and probably lead to an even more hawkish stance by Washington.
By Irina Slav For Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
Comments
All those things just weaken the position of the US in the Asian Pacific region and makes the US leverage weaker and weaker.
Europe has already realized and basically acknowledged that these sanctions are nothing else but sanctions against Europe itself, type of bullying done on the pain of attacks on the European financial and business institutions by the US regulatory power in the case those won't voluntarily take the hit from stopping their legitimate business with Iran.
Asia will continue to create and solidify institutions to get around dollar-based trading system, and Europe has already started doing it, to avoid the acts of economic harassment and threats from its so-called "ally" US.
Furthermore, it is preposterous to issue waivers to China and India. China as the world’s largest economy and a superpower in its own right and India the world’s third-largest economy and also a nuclear power don’t need sanction waivers to buy Iranian crude.
China has been increasing its purchases of Iranian crude significantly and will continue to do exactly that partly because it is getting a good deal from Iran like India and partly as a retaliation against the US escalating trade war against it.
Moreover, China could singlehandedly nullify US sanctions altogether by importing the total Iranian oil exports amounting to 2.2 mbd and paying for them in petro-yuan. China will be more than happy to oblige as a retaliation against US escalating trade war against it particularly if the coming meeting between President Trump and Chinese President Xi Jingping on the 6th of November fails to produce a breakthrough ending the escalating trade war between them.
With India, it is always advisable to judge it by what it does and not by what it says. Judging by the rising cost of its oil import bill and the discounted crude Iran is offering, it will continue to import its needs of Iranian oil waiver or no waiver.
As for Italy and Greece, they are members of the European Union (EU) and therefore they don’t need sanction waivers since the EU has already declared that it will not comply with US sanctions against Iran.
Turkey also announced that it will continue to buy Iranian crude and therefore it doesn’t need a sanction waiver. As for Japan, Taiwan and South Korea, they were given sanction waivers because the United States knows that it can’t stop them buying Iranian crude.
Russia will continue to buy Iranian crude and help Tehran sell it abroad. Russia buys Iranian crude under an oil-for-goods swap deal inked in 2014 and then resells it to other countries. Moreover, Russia and China will do their utmost to frustrate the US sanctions.
I am on record having been saying for the last 11 months that US sanctions against Iran will fail miserably and that Iran will not lose a singly barrel from its oil exports.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business, London