New York: The US announced Monday that it was ending the waiver given to India to buy Iranian oil and has threatened sanctions if it did not comply with the embargo.
Announcing the end of the waivers, White House Press Secretary Sarah Huckabee Sanders said: “Trump has decided not to reissue Significant Reduction Exceptions (SREs) when they expire in early May. This decision is intended to bring Iran’s oil exports to zero, denying the regime its principal source of revenue.” When the US imposed sanctions on Iran in November, India and seven other countries were given exemptions that will expire May 2.
US Secretary of State Mike Pompeo later told reporters that countries that do not abide by the embargo will face sanctions. They will encounter sanctions that will affect their international financial transactions, he said. “We stand by our allies and partners as they transition from Iranian crude to other alternatives,” Pompeo added.
The US was increasing oil production and was working with Saudi Arabia and the United Arab Emirates to ensure that there will be no disruption in oil supplies as a result of the ending of the waivers, according to Pompeo.
In May 2018, Trump withdrew from the 2015 international agreement with Iran on de-nuclearisation that had ended sanctions on that country.
In November, Trump reimposed tough sanctions on Iran but gave India, China, Japan, South Korea, Taiwan, Turkey, Italy and Greece six-month temporary waivers to continue buying oil. India was reportedly importing about 1.25 million tonnes of oil per month from Iran.
The decision of the US President has sent oil prices to their highest in 2019, even though the White House said the United States was working with top OPEC exporter Saudi Arabia and the United Arab Emirates to ensure the oil market is “adequately supplied”.
The sanctions were imposed as Washington pressed Iran to curtail its nuclear programme and stop backing militant proxies across the Middle East.
Secretary of State Mike Pompeo Monday reiterated that Washington’s goal was to bring down exports of Iranian oil to zero and added the United States had no plans to give any grace period beyond May 1 for countries to comply.
“Today I am announcing that we will no longer grant any exemptions,” Pompeo said in a briefing. “We are going to zero. We’re going to zero across the board.”
Oil prices spiked after Sunday reports that the waivers would end and remained higher on Monday. International benchmark Brent rose 2.6 percent to $73.87 a barrel after earlier touching $74.31, highest since early November. US crude futures gained 2.4 percent, or $1.52 a barrel, to $65.52.
It earlier touched a high of $65.87, a level not seen since late October.
Trump had unilaterally pulled out of the 2015 nuclear accord between Iran and six world powers last May after frequently criticizing as “the worst deal ever”, the accord reached under predecessor Barack Obama.
The United States had been deliberating over the past couple of months whether or not to renew some of the waivers while avoiding a spike in oil and fuel prices that could hurt US consumers.
Iran’s exports have fallen to less than 1 million barrels per day from more than 2.5 million bpd before sanctions were re-imposed a year ago.
In recent months, Saudi Arabia and other OPEC members have cut supply dramatically. While the kingdom is expected to boost output again, analysts fear the US move — along with sanctions on Venezuela’s oil industry — will leave the world with inadequate spare capacity.
—agencies