EghtesadOnline: The US administration said on Monday that it will not renew waivers that let countries buy Iranian oil without facing sanctions, a move that roiled energy markets and risks upsetting major importers such as China and India.
Oil prices had started to climb as reports emerged on Sunday that the US planned to eliminate the exemptions.
The price of Brent crude, the global oil benchmark, rose as much as 3.3% to $74.31 a barrel on Monday, the highest intraday level in almost six months, Bloomberg reported.
Trump’s efforts to cut Iranian supplies have rocked oil markets in the past year. After running up above $85 a barrel in anticipation of sanctions, oil plunged to near $50 in the last three months of 2018 as the administration unexpectedly granted the waivers, according to Financial Tribune.
The current set of waivers—issued to China, Greece, India, Italy, Japan, South Korea, Taiwan and Turkey—expires on May 2.
US Secretary of State Michael Pompeo announced the Monday decision in Washington.
He also announced commitments from other suppliers, including Saudi Arabia and the UAE, which will offset the loss of Iranian crude on the market.
The decision not to renew the waivers is a victory for hardliners such as National Security Advisor John Bolton and his allies who had argued that US promises to get tough on Iran were meaningless with waivers still in place.
Pompeo and his team had been more cautious, though they also maintained that the market was well-supplied to ramp up pressure on Iran.
In response to the move, Iran’s Foreign Ministry said that in view the negative impact of the sanctions on Iranian oil exports, the ministry has been engaged in “intensive consultation” with Tehran’s trading partners, including European and neighboring countries, to counter the US measures.
The statement added that “the results of these consultations have been communicated to the decision-making bodies and the required decision in this regard will be announced soon.”
An unnamed source told Bloomberg that US President Donald Trump had briefed Saudi Arabia’s Crown Prince Mohammad bin Salman and UAE Crown Prince Mohammed bin Zayed on the decision in phone calls in the last few days. The US decision had been reported earlier by Washington Post.
According to the Chinese Foreign Ministry Spokesman Geng Shuang, China consistently opposes unilateral US sanctions against Iran.
At a daily news briefing on Monday, he said China’s bilateral cooperation with Iran was in accordance with the law.
China is a major importer of Iranian oil and was one of eight buyers granted a waiver by the United States to continue buying Iranian oil.