Iran oil minister: USA waivers not enough, painful time ahead

Irving Hamilton
November 9, 2018

Oil's slump has been exacerbated by a US decision to allow eight countries to continue importing from Iran even after it hits the OPEC member with sanctions. The countries exempted from the United States sanctions on Iran's oil exports include China, India, Greece, Italy, Taiwan, Japan, Turkey and South Korea, which together took in over 80 percent of Iran's oil exports previous year.

When asked on the fate of Chabahar Port after the U.S. reimposed all its sanctions on Iran, the spokesperson said, "This exception relates to reconstruction assistance and economic development for Afghanistan".

"Iran's situation is better than pre-2016 because of high oil prices and the fact that the USA is isolated this time", the report by Reuters quoted a European diplomat as saying.

JP Morgan said "the lack or difficulty in acquiring shipping insurance will help in reducing exports quickly as they did during last worldwide sanctions".

Worldwide oil customers should brace for pain as USA sanctions on Iran take hold, the Islamic Republic's oil minister has warned, arguing that waivers Washington granted to eight major oil-importing countries are not enough to keep global markets stable. The waivers, he notes, are temporary and growth in demand is "likely underestimated".

For further details, see below. But the broadly united front of world powers that enforced sanctions on Iran previously, pushing Iran into nuclear restraint, has unraveled since Trump took office and clashed with allies over everything from trade to collective security.

Brian Hook, the special US representative for Iran, said that as major insurers withdraw coverage from Iranian vessels, Iran will likely turn to domestic insurance companies that will not be able to cover losses for maritime accidents that could run into the billions of dollars.

India has invested heavily in developing Chabahar, which provides strategic access not just to Iran but Central Asia, bypassing Pakistan.

India is the second largest recepient of oil from Iran after China. The U.S. crude CLc1 rose 58 cents to $62.79.

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Waivers, however, were granted to eight major importers to continue buying Iranian petroleum products without penalty for another six months.

The won-denominated payments will go into escrow accounts handled by the Industrial Bank of Korea (IBK) and Woori Bank.

USA sanctions had been lifted under the auspices of the 2015 Joint Comprehensive Plan of Action (JCPOA or, more simply, the Iran nuclear deal) negotiated by the Obama administration along with China, France, Russia, the U.K., Germany, and the European Union.

Japan's trade minister, Hiroshige Seko, said on Tuesday that Japanese buyers were expected to resume imports from the Islamic Republic again soon.

"Any serious discussion will be toward the December meeting", the third source said.

India is, thus, being given time to phase out its oil imports from Iran in a calibrated fashion.

Italy and Turkey have been importing around 200,000 bpd of oil from Iran over the past two years, with Greece importing less than 100,000 bpd. This most recent downward spiral has taken five weeks.

India has warm relations with Iran and has joined China and European powers in saying it was not obligated to comply with the unilateral US sanctions, although it has sought to appease Washington by curbing some of its Iranian oil imports.

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