• 3 minutes China has *Already* Lost the Trade War. Meantime, the U.S. Might Sanction China’s Largest Oil Company
  • 7 minutes Saudi and UAE pressure to get US support for Oil quotas is reportedly on..
  • 11 minutes China devalues currency to lower prices to address new tariffs. But doesn't help. Here is why. . . .
  • 15 minutes What is your current outlook as a day trader for WTI
  • 2 hours Maybe 8 to 10 "good" years left in oil industry * UAE model for Economic Deversification * Others spent oil billions on funding terrorism, wars, suppressing dissidents * Too late now
  • 19 hours Long Range Attack On Saudi Oil Field Ends War On Yemen
  • 6 hours In The Bright Of New Administration Rules: Immigrants as Economic Contributors
  • 2 hours Will Uncle Sam Step Up and Cut Production
  • 6 hours 'No - Deal Brexit' vs 'Operation Fear' Globalist Pushback ... Impact to World Economies and Oil
  • 7 hours CLIMATE PANIC! ELEVENTY!!! "250,000 people die a year due to the climate crisis"
  • 12 mins With Global Warming Greenland is Prime Real Estate
  • 10 mins Sad . . . Only thing that moves oil price up is an attack on Tankers or Oil Facilities (Staged or real?)
  • 1 day Gretta Thunbergs zero carbon voyage carbon foot print of carbon fibre manufacture
  • 8 hours Domino Effect: Rashida Tlaib Rejects Israel's Offer For 'Humanitarian' Visit To West Bank
  • 11 hours Trump vs. Xi Trade Battle, Running Commentary from Conservative Tree House
  • 1 day Continental Resource's Hamm wants shale to cut production. . . He can't compete with peers.
  • 2 days NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
  • 1 day US Petroleum Demand Strongest Since 2007
Alt Text

Imagining A Global Solar Empire

Global equity markets took a…

Alt Text

A Limited Risk Play In A Shaken Market

Recession fears tanked stock markets…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

More Info

Premium Content

Markets Brace For U.S. Decision On Iran Sanction Waivers

Over the past few months, oil market participants and analysts focused on OPEC’s production cuts, soaring U.S. shale output, the U.S.-China trade dispute, projections of slowing oil demand growth, and most recently—the U.S. sanctions on Venezuela’s oil industry.  

While these factors are still on everyone’s mind, the U.S. sanctions on Iran’s oil are also returning to focus with the six-month waivers to key Iranian oil customers expiring in six weeks.

The U.S. Administration continues to signal that the ultimate goal of the sanctions is zero Iranian exports, yet analysts believe that oil prices at end-April early-May will be a key factor in the decision whether to extend the waivers and demand additional reductions from Iranian oil customers.  

Meanwhile, Iran’s key buyers in Asia ramped up imports in January and February compared to November and December last year, when there was a lot of confusion over who is getting waivers and under what circumstances.

Iranian customers, however, while hoping for—and some of them reportedly working to secure—waivers extensions, have drafted contingency plans for alternative oil supplies in case they won’t get new waivers.

The U.S. granted waivers to eight of the major Iranian clients—including the biggest—China and India—after it slapped sanctions on Iran’s oil, sending oil prices sharply down in the fourth quarter of 2018, after the OPEC+ alliance had preemptively ramped up production to offset what the U.S. Administration promised to be “zero” Iranian oil exports. Related: Cuba Faces Oil Crisis As Venezuela Crumbles

Oil prices plunged in Q4 as oversupply started to build again and as the market began to panic over the U.S.-China trade war with potential consequences on global trade, economic growth, and oil demand growth.

Going into Q2 this year, the U.S. policy towards Iran’s oil exports will be one of the key factors for setting the trend of the oil prices.

The price of oil, on the other hand, will be key to the U.S. Administration’s decision, consultancy Energy Aspects said in a recent note, as carried by Bloomberg. If prices stay at their current levels (Brent at around $67, WTI at $58), Energy Aspects sees the U.S. extending the waivers for China, India, Japan, South Korea, and Turkey, with import caps slashed by 30-50 percent compared to what these countries are currently allowed to import from Iran. If oil prices rise, the allowed import levels may be lowered only by 20-30 percent, according to Energy Aspects.

Last week, sources with knowledge of the matter told Reuters that the United States would likely extend the waivers, but would demand additional reductions in imports, as the Administration is currently aiming at below 1 million bpd of Iranian oil exports.

According to various tanker-tracking data, Iran’s oil exports were at around 1 million bpd-1.2 million bpd in January and February.

The U.S. continues to aim for zero exports, officials say.

Yet, considering other current market-tightening measures including OPEC’s cuts and the U.S. sanctions on Venezuela’s oil, the Trump Administration could opt for another softer stance on waivers rather than risk running up oil prices to above $70 a barrel Brent, which doesn’t sit well with U.S. President Donald Trump.

In his keynote address at the CERAWeek energy conference in Houston last week, U.S. Secretary of State Mike Pompeo said, referring to Iran:

“You know its role in global energy markets. We know that role is diminishing. Its exports have tanked due to our pressure campaign, and we have every intention of driving Iranian oil exports to zero just as quickly as we can.” Related: IEA Warns Of Looming Oil Market Deficit

“I’m not going to get ahead of myself or ahead of the President, but make no mistake about it, that’s the direction of travel,” Secretary Pompeo said in an interview with Brian Sullivan of CNBC in Houston, when asked if it was possible to bring down Iran’s oil exports to zero.

Bringing down Iranian barrels to zero could be done this year without compromising global oil supply, four U.S. officials told Bloomberg last week.

The State Department Special Representative for Iran, Brian Hook, told CNBC last week that projections for supply outstripping demand could provide more wiggle room to the U.S. to tighten the screws on Iran, but noted that “We don’t preview exemptions or nonexemptions.”

OPEC—excluding Iran and Venezuela—currently has around 2.8 million bpd of effective spare production capacity due to the ongoing cuts, so “the potential means of avoiding serious disruption to the oil market is theoretically at hand,” in the event of serious losses from Venezuela, the International Energy Agency (IEA) said on Friday.  

However, if a serious loss from Venezuela were to coincide with ‘waiver-for-no-one’ regarding Iran, oil prices could shoot up again as they did in the run-up to the sanctions on Tehran when U.S. officials were promising ‘zero’ Iranian oil exports. So the U.S. Administration may want to prevent a spike in prices, which, incidentally, may largely depend on where oil prices are at end-April early-May.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage


Leave a comment
  • Mamdouh Salameh on March 18 2019 said:
    There will be no surprises here. The Trump administration has no alternative but to renew the sanction waivers it issued last year to the eight biggest buyers of Iranian crude when they expire in May or issue new ones for no other reason than to use them as a fig leaf to mask the fact that US sanctions have yet to cost Iran the loss of even a single barrel and the fact that the zero exports option is a bridge too far.

    The countries which account for 95% of Iranian oil exports, namely, China (35%), India (33%), the EU (20%) and Turkey (7%) not only have upped their purchases but will continue to purchase Iranian crude with or without waivers. Japan and South Korea accounting for the remaining 5% are still buying Iranian crude albeit with sanction waivers.

    Moreover, the renewal of the sanction waivers will happen irrespective of the level of oil prices then or even a total collapse of Venezuelan oil production.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play