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Some countries might get waivers to continue importing crude oil from Iran, Secretary of State Mike Pompeo has suggested. Speaking during an interview with Sky News Arabia, the top U.S. diplomat said, "There will be a handful of countries that come to the US and ask for relief from that. We'll consider it."
Pompeo, however, said that continuing to buy Iranian crude despite the sanctions, which will take effect on November 4, will lead to a response. "Come November 4, there will be a U.S. sanction that prevents crude oil from passing from Iran to other countries. It will be sanctionable activity. We will enforce those sanctions," he said.
China, India, and Europe are for now the biggest buyers of Iranian crude. China has indicated that it has no intention of complying with U.S. sanctions, especially now that the US and China are embroiled in a quickly escalating trade war. Meanwhile, India is desperately trying to strike a balance between the U.S. and Iran.
The European Union has suggested that it will try to find ways around the sanctions, possibly by invoking a protectionist piece of legislation from the 1990s, but it has not made any moves in this direction yet save for a declaration that it will continue to import Iranian crude, which it made after a meeting of the Joint Commission of the Iran nuclear deal in Vienna earlier this month.
Meanwhile, Reuters reported in late June that European refiners have started to cut oil deliveries from Iran, wary of the coming sanctions, apparently not trusting the EU to score a waiver with the State Department.
Pompeo’s statement comes amid rising oil prices and might indicate that Washington has come to terms with the fact that the pressure it is applying on allies to make them stop importing Iranian crude is spooking traders and boosting prices.
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.
President Trump’s attempts to convince the global oil market that US sanctions could cost Iran 1 million barrels a day (mbd) of its oil exports coupled with western media’s fake news claiming that South Korea, India and Japan have already decided to halt their imports of Iranian crude, are already creating doubts in the global oil market as to whether US sanction will succeed.
India announced that it doesn’t recognize any sanctions but UN sanctions and that it will not only ignore US sanctions on Iran but will continue to import Iranian crude.
Now the South Korean Embassy in Tehran took the unprecedented step to deny that South Korea would stop buying crude from Iran in anticipation of US sanctions.
A heavy weight like Japan is also trying to find a way around a complete cut of Iranian imports.
The overwhelming nations of the world will ignore the US call to halt imports of Iranian crude. That is why US sanctions against Iran are doomed to fail.
The back-peddling by the State Department is mainly prompted by President Trump’s worry that rising oil prices will offset the benefits from his tax cuts and thus cost his republican party the midterm elections of the US senate and the US House of Representatives in November this year.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London