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Washington is considering the addition of more sanctions against Iran and these could be announced next month, a government official who wished to remain unnamed told Reuters.
“We just want a continued chilling effect,” the source said. “We want businesses to continue to think doing business with Iran is a terrible idea at this point,” he added, saying the new sanctions will target new, as of yet unsanctioned sectors of the Iranian economy.
As regards the waivers Washington granted eight Iranian oil importers last November, the official repeated the adage that we’ve been hearing from pretty much everyone in the administration speaking to the media: the goal to bring Iranian oil exports to zero remains the ultimate goal. Extension of the waivers may not be granted even though some importers including India are already negotiating such extensions to keep the flow of cheap Iranian crude coming in.
According to the official who spoke to Reuters this week, U.S. crude oil will help plug the hole left by Iranian crude on the international markets, but this is doubtful price-wise: U.S. crude, for geographical and consequently transportation reasons, is costlier than Iranian crude and likely to remain so in the observable future.
This, however, does not mean it is not being bought. South Korea, for one, turned into the biggest buyer of U.S. crude this year despite being granted a sanction waiver. India, however, will be hard pressed to switch from Iranian to U.S. crude: it depends on exports for more than 80 percent of its oil consumption and at this level of import dependency, every cent matters, especially for an emerging economy.
Despite Washington’s insistence on the zero Iranian oil exports, most analysts seem to agree that at least five importers will get a waiver extension, including South Korea, China, India, Japan, and Turkey. This would mean Iran will be—officially—exporting 1.1 million bpd next month.
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.