Published: Fri, November 02, 2018
World Media | By Cesar Oliver

Oil under pressure from rising output, but Iran sanctions loom

Oil under pressure from rising output, but Iran sanctions loom

Moments after coming out the deal, Trump singed fresh sanctions against Iran and warned countries against any cooperation with Tehran on its controversial nuclear weapons programme. The Trump administration has rebuffed them and gone ahead with its sanctions plan, arguing that nations, banks and businesses worldwide will decide they'd rather do business with the USA than Iran and leave the market.

On the one hand, it's unclear how much Iranian oil will really be removed from the market, considering that Iran has already started to switch off transponders on board of some of its cargoes, although ship-tracking data on the tankers that can be tracked shows that Iranian oil exports are falling, but not as steeply as the market and analysts were expecting just a month or two ago.

The U.S. government has agreed to let eight countries, including close allies South Korea and Japan, as well as India, keep buying Iranian oil after it reimposes sanctions on Tehran from next week, Bloomberg reported on Friday, citing a U.S. official.

The spokesperson of the Ministry of External Affairs said India has been in talks with the U.S.as well as with Iran to ensure uninterrupted energy supply.

The identity of the countries getting waivers is expected to be released officially on Monday, when USA restrictions against oil dealings with Iran go back into effect.

India has told the USA that it would be impossible for India until at least next March to stop importing Iranian oil-which is cheaper than alternatives-because of India's rising energy bill and weaker currency, an Indian government source told Reuters earlier this week.

The determination is needed under USA law for Washington to impose sanctions on foreign countries that fail to significantly reduce their purchases of Iranian oil and petroleum products. Iran could mix its oil with crude from neighboring Iraq, sell on the black market or try a barter system supported by the European Union.

US Secretary of State Mike Pompeo said in September that the White House would only consider waivers for Iran's oil buyers if they vowed to eventually bring their imports to zero. Other countries, including Iraq and Afghanistan, depend on some imports from Iran. Iran supplied 18.4 million tonnes of crude oil between April 2017 and January 2018 (first 10 months of fiscal 2017-18).

President Donald Trump withdrew from the deal in May, describing it as "defective at its core". After the latest round of USA sanctions was announced, HPCL was the first Indian refiner to halt purchases from Iran after its insurer backed out. He said those countries had made efforts to eliminate their imports but could not complete the task by Monday's deadline.

"Most European countries - in spite of the UK, Germany, and France having determined that they want to stay inside the JCPOA, in spite of that, almost every significant European company has already fled Iran".

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