The knowns and un­knowns of US Iran oil sanc­tion waivers

Iran Daily - - Domestic Economy -

The United States on Mon­day reim­posed sanc­tions against Iran’s oil ex­ports.

Wash­ing­ton had been push­ing gov­ern­ments to cut im­ports of Ira­nian oil to zero. But, fear­ing a price spike, it granted Iran’s big­gest buy­ers — China, In­dia, South Korea, Ja­pan, Italy, Greece, Tai­wan and Turkey — sanc­tions waivers, Reuters wrote on Fri­day.

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

Wash­ing­ton 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 (mbd)” dur­ing the ex­emp­tion pe­riod.

J.P. Mor­gan said, “The lack or dif¿culty in ac­quir­ing ship­ping in­sur­ance will help in re­duc­ing ex­ports quickly as they did dur­ing last in­ter­na­tional sanc­tions.”

The US bank 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 Iran 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 China 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 state-owned re¿ners have lob­bied hard for waivers.

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

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

Mean­while, China Na­tional Pe­tro­leum Corp. (CNPC) is still tak­ing oil from Ira­nian ¿elds in which CNPC has own­er­ship stakes, ac­cord­ing to a com­pany ex­ec­u­tive.

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

In­dia is the world’s third-big­gest oil im­porter. One In­dian source close to the coun­try’s re¿ning sec­tor said In­dia 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

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

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

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

South Korea has av­er­aged over 200,000 bpd of oil im­ports from Iran so far this year.

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 In­dus­trial Bank of Korea (IBK) and Woori Bank.

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

Ja­pan

Ja­pan, an­other key Asian US ally, also ceased Ira­nian oil im­ports 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.

Re¿ning sources in Ja­pan, how­ever, said they ¿rst needed to eval­u­ate the con­di­tions at­tached to the waivers, with no new or­ders likely be­fore De­cem­ber.

Tai­wan

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

Turkey, Italy, Greece

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.

Italy and Greece 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.

Turkey has said it is also eval­u­at­ing pos­si­ble im­ports af­ter re­ceiv­ing a waiver, but Pres­i­dent Re­cep Tayyip Er­doğan said on Tues­day the coun­try would not abide by the sanc­tions as they were aimed at ‘un­bal­anc­ing the world’.

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