Wed. Oct 23rd, 2019

U.S. to end all waivers on imports of Iranian oil, crude price jumps

WASHINGTON (Reuters) – The United States on Monday demanded that all buyers of Iranian oil stop purchases by May 1 or face sanctions, a move to choke off Tehran’s oil revenues which sent crude prices to six-month highs on fears of a potential supply crunch.

The Trump administration’s move on Monday not to renew exemptions granted last year to major buyers of Iranian oil was a more stringent outcome than some nations had expected. Several importers had hoped to continue buying Iranian oil without facing U.S. sanctions, according to sources familiar with discussions between the United States and other nations as late as last week.

The United States reimposed sanctions in November on exports of Iranian oil after U.S. President Donald Trump last spring unilaterally pulled out of a 2015 accord between Iran and six world powers to curb Tehran’s nuclear program. Eight economies, including China and India, were granted waivers for six months, and several had expected those exemptions to be renewed.

Tehran remained defiant, saying it was prepared for the end of waivers, while the Revolutionary Guards repeated a threat to close the Strait of Hormuz, a major oil shipment channel in the Gulf, Iranian media reported.

The White House said it was working with top oil exporters Saudi Arabia and the United Arab Emirates to ensure the market was “adequately supplied.” Traders, already fretting about tight supplies, raised skepticism about whether this more stringent approach, along with ongoing sanctions on Venezuela’s oil industry, could backfire in the form of a major spike in prices.

“It is a surprise that the requirement to cease importing Iranian oil should come at this next May deadline,” said Elizabeth Rosenberg, director of the energy, economics and security program at Washington-based Center for a New American Security. “Having only several weeks’ notice before the deadline means there are lots of cargoes booked for May delivery. This means that it will now be harder to get it out by the deadline.”

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