US throttles Iran oil flows to buyers who vowed resistance

The world’s top oil buyers are discovering that US sanctions on Iran will squeeze their trade flows whether they agree with America or not.

It was only about three months ago that India’s Foreign Minister Sushma Swaraj, said that the country won’t adhere to unilateral restrictions and will continue buying Iranian crude. China also made similar comments and was said to have rejected an American request to cut imports. Japan and South Korea have held talks with the US aimed at securing exemptions. Yet for all the pushback and negotiations, an emerging pattern shows US sanctions are succeeding in throttling Iran’s sales to its customers even before the measures take effect in early November. While the US initially wanted a complete halt in purchases, traders are now concerned that even a revised aim for only cuts would take out enough supply to create a market deficit — which other producers may struggle to fill.

“All of Iran’s oil customers are affected by increasing US pressure to halt purchases, even as they request for concessions to cope with the consequences,” said Den Syahril, a senior analyst at industry consultant FGE. “We expect India and especially China to maintain some degree of imports, while buyers in Japan and Korea who’ve cut imports considerably will continue to aggressively seek waivers up till the last minute.”