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The U.S. sanctions imposed last November on Iran have denied the country some US$10 billion in oil revenues so far, Washington’s Special Envoy for Iran Brian Hook told media.
The comments were made days after Washington announced the end to sanction waivers that it had granted eight large Iranian oil importers, among them India, China, Japan, and South Korea.
“Before sanctions...Iran generated as much as $50 billion annually in oil revenue. We estimate that our sanctions have already denied the regime more than $10 billion since May,” Hook said, referring to May 2018 when President Trump said the sanctions would be returning later in 2018.
According to Reuters, before the sanctions—and after the UN-approved sanctions were removed thanks to the so-called nuclear deal—Iran exported some 4 million bpd of crude, which made it one of the largest producers in OPEC. Now, export data suggests, the country is exporting about 1 million bpd.
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Saudi Arabia and the UAE, as well as Iraq, have stated they would be ready to step in and fill the gap left by Iranian crude oil after the end of waivers next week but China, for one, has signaled that it will not respect the end of the waivers. Unlike others, China has been vocal in its opposition to the removal of the waivers while India has stated it would look to other suppliers to compensate for the cutoff of Iranian oil. South Korea and Japan do not expect any major negative impact from the cancelation of the waivers.
Despite Washington’s determination to completely stop the flow of oil from Iran to foreign markets, few believe the zero-export target is achievable. If anything, it would spur more smuggling, some observers believe. What it will undoubtedly do, however, is keep prices higher, closer to where Saudi Arabia and other OPEC producers would like them to be, in stark contrast to what voting drivers in the U.S. want.
It’s no coincidence that after its initial declaration of support and readiness to reverse production cuts, Saudi Arabia noted it would not rush into a reversal of the cuts but would rather first wait and see what happens in Iran.
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.