The United States will likely extend the Iran sanction waivers that it granted eight countries importing crude from Iran, but will demand that they reduce their intake of the commodity, sources with knowledge of the matter told Reuters.
The ultimate goal of Washington remains the same: reduce Iranian oil exports to zero in hopes this will topple the government. However, for the time being, the Trump administration will ask major Iran oil importers to reduce the amount of crude they buy from the sanctioned country.
The figure Washington is aiming at is below 1 million bpd, which means a cut by some 250,000 bpd. Iran’s biggest oil clients are India and China.
“The goal right now is to reduce Iranian oil exports to under 1 million barrels per day,” one of the sources said, adding that Washington was worried about the risk of oil prices spiking if the zero exports scenario was pushed too quickly.
In fact, one of the sources said, the zero export scenario might never play out because crude oil prices—Brent crude in particular—are already at “the high end of Trump’s crude price comfort zone.”
They seem to be at the high end of India’s oil minister’s comfort zone, too. Last week, during a meeting with his Saudi counterpart, Dharmendra Pradhan called on the Kingdom to make sure the market was well supplied so prices would not goo too high amid OPEC production cuts.
India is currently negotiating with the U.S. an extension of the sanction waivers. It is perhaps the most vulnerable Iranian oil importer when it comes to prices shocks since the country imports more than 80 percent of the crude it consumes.
Meanwhile, undeterred by U.S. plans, Iran is looking into replacing aging tankers from its fleet with newer, second-hand vessels, Reuters reported yesterday, as it plans to keep its crude flowing into international markets.
By Irina Slav for Oilprice.com
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