Trump administration imposes new oil, other sanctions against Iran
The US government has reimposed new oil and other sanctions against Iran effective the 5th November which replace provisions under a 2015 multinational nuclear arms control agreement from which it withdrew in May, the Trump administration has announced.
Eight countries which officials would not identify will receive temporary exemptions. They reportedly include China, Japan, and India, which rely heavily on crude oil imports from Iran.
“We expect to issue some temporary allotments to eight jurisdictions, but only because they have demonstrated significant reductions in their crude oil and cooperation on many other fronts and have made important moves towards getting to zero (Iranian) crude oil importation,” US Secretary of State Michael Pompeo said.
“These negotiations are still ongoing. Two of the jurisdictions will completely end imports as part of their agreements. The other six will import at greatly reduced levels,” he told reporters during a teleconference.
The Treasury Department’s Office of Foreign Assets Control issued a list of frequently asked questions regarding the imposed sanctions on the 5th November. Questions 614 through 620 deal specifically with oil, gas, and petrochemicals.
Iran’s oil exports have fallen by about one million b/d since peaking in June, the White House said.
More than 20 countries have stopped importing Iranian crude, and the administration is pressing others to do the same, it said.
The Trump administration is providing fewer exemptions than those of President Barack Obama, which issued them to 20 countries “multiple times,” Mr Pompeo said. “We will have issued, if our negotiations are completed, eight and have made it clear that they are temporary,” he said.
“Not only did we decide to grant many fewer exemptions, but we demanded much more serious concessions from these jurisdictions before agreeing to allow them to continue temporarily to import Iranian crude oil. These concessions are critical to ensure that we increase our maximum pressure campaign and accelerate towards zero,” Mr Pompeo said.
Prices have been stable
What he termed a “laser-focused approach” has kept global crude prices stable with a benchmark Brent price about where it was in May when the administration first announced it was withdrawing the US from the 2015 Joint Comprehensive Plan of Action (JCPOA), Mr Pompeo said.
“Not only is this good for American consumers and the world economy, it also ensures that Iran is not able to increase its revenue from oil as its exports plummet. We will, we expect, have reduced daily Iranian crude oil exports by more than one million bbl even before these sanctions go into effect,” he said.
The reimposed sanctions also close “an Obama-era loophole” which allowed countries to continue importing condensate from Iran while sanctions on oil were in place, Mr Pompeo said.
“This administration is treating condensate the same as crude since the [Iranian] regime makes no distinction between the two when it decides to spend its oil revenue on unlawful ballistic missiles, terrorism, cyberattacks, and other destabilizing activities,” he said.
Starting on the 5th November 100% of the revenue which Iran receives from sales of its crude will be held in foreign accounts and can be used by its government only for humanitarian trade or bilateral trade in non-sanctioned goods and services, Mr Pompeo said.
Evasive manoeuvres targeted
The administration is firmly committed to thwarting Iranian government attempts to thwart sanctions on its crude exports, Mr Pompeo said.
“Make no mistake about it: The Iranians will do everything they can to circumvent these sanctions – that’s unsurprising to me. They’ll turn off ships, they’ll try and do it through private vessels, they’ll try and find third parties who don’t interact with the United States to provide insurance mechanisms. The list of Iranian efforts to circumvent these sanctions is long,” he said.
“You should all recognise there’s a reason for that. These sanctions are far tougher than the sanctions which have ever been imposed on the Islamic Republic of Iran. That is why they are so desperate to find ways to circumvent it,” Mr Pompeo said.
The administration is confident that global oil markets will remain well-supplied if Iranian exports cease, the White House said. “From August 2017 to August 2018, US crude oil production increased by 2.1 million b/d and exports increased by nearly 1 million b/d, adding to market liquidity,” it said.
“Over the next year, US production will increase by one million b/d or more. We are working with oil producers around the world to increase their supply as well,” it said. “As a result of this increased production, respected forecasters like the US Energy Information Administration expect global oil supply to keep pace with demand in late 2018 and exceed demand in 2019.”
Source: Oil & Gas Journal