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U.S. Treasury Secretary Steven Mnuchin warned this weekend that countries importing Iranian crude that want to continue importing it will need to reduce their intake of Iranian crude by more than 20 percent to win a sanction waiver. In an interview with Reuters, Mnuchin also said “Oil prices have already gone up, so my expectation is that the oil market has anticipated what’s going on in the reductions. I believe the information is already reflected in the price of oil.”
The 20-percent reference number is the reduction in Iranian oil imports that the Obama administration required in the previous round of sanctions to provide waivers. Mnuchin did not say exactly how deep the cuts would need to be now, saying only that he “would expect that if we do give waivers it will be significantly larger reductions.”
The official also said he was confident of the success of the zero-import policy pursued by the Trump administration. “I don’t expect we will get to zero in November but I do expect we will eventually get to zero,” he told Reuters. “There have been already very significant reductions in advance of this date.”
Japan and South Korea are the two countries that stopped importing Iranian crude ahead of the sanctions, which enter into effect in two weeks. Yet China, at the same time, has taken in a lot more than usual, part of it probably shipped to the Dalian port for storage.
In its push against Iran, Washington has also turned to SWIFT, the cross-border transaction settlement service. Mnuchin said that the United States is in negotiations with the company to cut Iran out of its network. Washington tried to get SWIFT to cut out Tehran back in 2012 as well.
“I can assure you our objective is to make sure that sanctioned transactions do not occur whether it’s through SWIFT or any other mechanism. Our focus is to make sure that the sanctions are enforced,” Mnuchin said.
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.