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The knowns and unknowns of U.S. Iran oil sanction waivers

Reuters 

(Reuters) - The on Monday re-imposed sanctions against Iran's exports to punish for its involvement in several Middle Eastern conflicts.

had been pushing governments to cut imports of Iranian to zero. But, fearing a price spike, it granted Iran's biggest buyers - China, India, South Korea, Japan, Italy, Greece, and - sanctions waivers.

That will allow the eight, which account for about 75 percent of all Iran's exports, according to trade data, to import at least some oil for another 180 days.

and the recipients of the waivers have not disclosed how much oil they are allowed to import, or under what conditions deals can still be made.

Bernstein Energy expects "Iranian exports will average 1.4-1.5 million barrels per day (bpd)" during the exemption period," down from a peak of almost 3 million bpd in mid-2018.

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

The U.S. also said "payments for the oil by the exempt countries must go into escrow accounts in their local currency" and that this "means the money won't directly go to and it can only be used to buy certain non-sanctioned goods from its crude export customers."

Once the waivers expire after 180 days, new waivers are expected to be issued, with a source in saying his country would likely receive another six months of exemptions, though at a lower rate of around 220,000 bpd.

CHINA

China, the world's biggest importer of crude oil, is also the top buyer of Iranian oil, and its mostly have lobbied hard for waivers.

Several Chinese sources with knowledge of the matter said would be allowed to buy 360,000 bpd of Iranian crude during the exemption period of 180 days.

That would be about half the daily average has been importing from since January 2016, trade data showed.

However, one source said the had attached strings to the waivers, including counterparty disclosures and laying open settlement methods, which were being evaluated before placing new orders with

Meanwhile, (CNPC) is still taking oil from Iranian fields in which CNPC has ownership stakes, according to a

Oil that Chinese companies have access to as part of their assets in Iran does not fall under the volumes China is allowed to import under the waiver, he said.

INDIA

is the world's third-biggest

is also Iran's second-biggest and will be one of the most exposed to a forced drop in supply because of its relative proximity to Iran.

One Indian source close to the country's refining sector said would likely be allowed to import around 300,000 bpd of Iranian crude during the exemption period compared with normal volumes of around 450,000 to 550,000 bpd.

SOUTH KOREA

is a of Iranian condensate, a super light form of crude oil, used by its large petrochemical industry.

A close U.S. ally, had stopped buying crude from Iran ahead of the sanctions while still lobbying for exemptions.

This week, reports emerged that received a waiver allowing it to import around 4 million barrels a month, equal to about 130,000 bpd, of Iranian crude and condensate.

South Korea has averaged over 200,000 bpd of from Iran so far this year, down from around 350,000 bpd in 2017.

Banking sources said any Korean payments for Iranian oil would need to be made in its won currency.

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

Officials from both banks said, however, that won-denominated payments for Iranian oil were still being reviewed, and that no schedule a for resumption was set yet.

JAPAN

Japan, another key Asian U.S. ally, also ceased Iranian prior to the sanctions, but has received a waiver to import an undisclosed amount of oil from Iran in the next 180 days.

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

Refining sources in Japan, however, said they first needed to evaluated the conditions attached to the waivers, with no new orders likely before December.

TAIWAN

is only an occasional importer of Iranian oil, and no details regarding its waivers have been disclosed.

TURKEY, ITALY, GREECE

and have been importing around 200,000 bpd of oil from Iran over the past two years, with importing less than 100,000 bpd.

and have completely suspended purchases in recent weeks. The waivers for those countries took the market by surprise and trading sources have said they are now evaluating prospects for resuming some imports.

has said it is also evaluating possible imports after receiving a waiver, but said on Tuesday the country would not abide by the sanctions as they were aimed at "unbalancing the world".

(Compiled by in SINGAPORE, Dmitry Zhdannikov in LONDON and Yena Park in SEOUL; Editing by Mark Potter and Richard Pullin)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Fri, November 09 2018. 11:22 IST
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