US ‘not looking’ to extend sanction waivers for Iran crude importers
The US on Tuesday served a fresh warning to importers of Iranian crude oil, such as India, that it was “not looking” to extend waivers, called significant reduction exemptions (SREs) from secondary sanctions for continuing purchases when they run out early May.
New Delhi is understood to be keen to get an extension to continue buying the current level, which is said to be around 1.3 million metric tonnes a month. It could not be immediately ascertained if India had already sought an extension, or if discussions had taken place already.
The current exemptions were granted last November when the United States rolled out the second phase of sanctions reimposed following President Donald Tump’s decision to walk out of the Joint Comprehensive Plan of Action, better known as the Iran deal, posting more severe conditions in 2017.
India was among eight countries that were granted waivers from the secondary impact of sanctions for a period of six months to enable them to reduce their import of Iranian crude to zero in a phased manner. The others were China, Japan, South Korea, Turkey, Taiwan, Italy and Greece.
“We are not looking to grant any exceptions to our campaign of maximum economic pressure,” Brian Hook, US special representative for Iran, said while speaking to reporters at a briefing on the Trump administration’s Iran strategy.
Hook was responding to a question about extending waivers. He argued that the last round of exemptions was granted in view of, among other things, “a very tight and fragile oil market” in 2018 and the US did not want to drive up prices by creating new demands for non-Iranian crude.
Year “2019 is a much better picture in global oil markets”, the top US diplomat for Iran said. “We forecast more supply than demand. And that creates much better conditions for us to accelerate our path to zero,” Hook said.
The existing SREs — they are called so as the exemptions are linked to significant reductions — expire on May 2 and an announcement is likely closer to the date.
India, which would be in the middle of the Lok Sabha election then, will also be watching out for a notification of its removal from a zero-tariff US import scheme, the Generalized System of Preferences (GSP), that is due around the same time, 60 days after the administration notified US Congress. India is hoping to delay the formal termination until after elections, enabling the next government to try and settle the underlying differences, essentially market access for American goods.
US oil sanctions that have been in force since May 2018 have taken off an estimated 1.5 million barrels of Iranian crude from the world market, denying Iran about $10 billion in revenues a month.
Twenty-three of its importing countries have dropped their purchases to zero, and of the eight granted waivers in November, three are down to zero. India and four other countries continue to buy.
The US diplomat did not name the countries that are still buying Iranian crude or those that have cut to zero.
It wasn’t clear yet if Hook’s remarks — “not looking” to extend exemptions — was a bargaining position or a final position. US negotiators had taken a similar nothing-but-zero position in talks leading up to the November sanctions but had relented later, agreeing to exemptions against significant reductions.