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The Trump administration's chief diplomat said the United States could grant waivers to some countries allowing them to continue importing Iranian crude when the sanctions return in November.
"There will be a handful of countries asking for help," US Secretary of State Mike Pompeo said Tuesday in a television interview with Sky News Arabia. "We'll think about it."
A separate briefing for journalists traveling with the secretary, a senior State Department official developed recent discussions between US diplomats and their Saudi counterparts. "We discussed keeping a market well-stocked oil tanker to guard against volatility, "said the UN official at a press conference."
It is still unclear whether Pompeo's latest comments about the Examination of applications for derogation and its brief name, represent a softening of the position of the administration.
ZERO, OR NOT?
Press briefings given more early this month suggests that the goal of the administration was to reduce "Our goal is to increase the pressure on the Iranian regime by reducing to zero its revenue from crude oil sales," said a senior official of the State Department at a press briefing at a press conference. "We are working to minimize disruptions in the global market, but we are confident that there is sufficient oil production capacity available worldwide," said Brian Hook, director of planning 2 July
. "We are not seeking to grant licenses or general waivers of the reimposition of sanctions, as we believe that pressure is essential to achieve our national security objectives."
D & # On the other hand, the administration also informed the journalists about the context. consider waiver applications on a case-by-case basis and work with countries that reduce their oil imports from Iran ("US says to work with allies to reduce Iranian oil imports", Reuters, June 28. [19659002] The current position seems to be that the sanctions will definitively fall on November 4, but the US will "consider" the demands of "a handful" The compromise would guarantee that at least some of the Iranian oil continues to reach the global market, as was the case under previous sanctions in effect between 2012 and 2015.
There are doubts about the possibility of continuing to import oil. Saudi Arabia and other producers can increase production enough to cover 2.4 million barrels per day of Iranian oil exports if the sanctions attempt to reduce them to zero.
The derogations and Exemptions allowing at least some Iranian barrels to continue being exported be the only practical way to reimpose sanctions without risking a sudden surge in oil prices.
Price increases are particularly sensitive at this time because the reimposition of sanctions coincides with the US Congress. general election on November 6th.
MAIN QUESTIONS
Despite multiple presentations and statements by senior US officials, the administration's policy on sanctions and oil deliveries remains unclear.
Ambiguity may be intentional to increase the pressure on Iran, but it also maximizes the uncertainty in the oil market regarding future supplies and is likely to keep the pressure on prices.
Traders, refiners and hedge funds do not have a clear picture Given that the oil market is looking towards the future, the uncertainty surrounding supplies during the last quarter and next year has a direct impact on prices.
seeking clarity from the State Department on several key issues while they attempt to badess the severity of the sanctions and the availability of oil:
(1) If the target of the administration is not zero oil exports, how much does the US plan to allow Iranian customers to buy without imposing pecuniary penalties?
(2) If there are sanctions exemptions, which countries and / or companies will receive them, on what basis will they be granted? Has the United States reached an agreement with Saudi Arabia (and perhaps also with the United Arab Emirates, Kuwait and Russia) to offset the impact of the oil volumes lost by the United States? 39; Iran?
] (4) Are the imposition of sanctions and the granting of derogations coordinated with the European Union (in particular France, Germany and Great Britain) and with Russia and China?
PERMITTED IMPORTS
Under the latest round of oil sanctions, in effect from 2012 to early 2016, allowed Iran to continue to export reduced volumes of crude oil. about 1 million bpd, mainly to customers in Asia.
If the US is considering a similar volume of ex This time, the refineries of Japan, South Korea, India, China and Turkey were in the number of those who this year reduced their exports by about 1.5 million bpd. continued to import limited volumes of Iranian crude without financial penalties from the United States.
In most cases, sanctions exemptions were implicitly or explicitly conditional on promises to reduce the volume of Iranian crude imported over time. Service, June 29, 2018)
The Administration did not specify whether the same countries would be exempt this time and if so under what conditions.
NUCLEAR AGREEMENT
France, Germany, Britain, Russia and China have all committed to abide by the 2015 nuclear agreement, which has eased sanctions against Iran in exchange for restrictions on the country's nuclear activities.
Negotiated a set of economic measures to entice Iran to stay within the scope of the agreement, accept ongoing restrictions on nuclear activities and authorize inspections.
The content of the economic package has not been released, but Iran has indicated that a first draft not far enough ("Negotiations to save the Iranian nuclear deal continue" Radio Free Europe, July 6)
France said the package would only be ready in November and Germany said it would not be able to compensate
] The harsher the US sanctions, the more they reduce Iran 's oil export earnings, plus the economic incentives that other foreign powers may have to offer Iran to persuade the country to comply with the US oil tax. ;agreement.
There may therefore be a link between the waiver process between the United States and Iranian refining customers on the one hand, and the negotiations between Europeans, Russians and Chinese. The other delicate link is between US sanctions on Iran and the US trade dispute with China over the protection of intellectual property, technology transfers and the
China is l " a leading importer of oil from the United States and Iran.
China has already targeted oil imports from the United States for retaliation in the trade dispute. Buying crude oil in the United States will require other sources of supply, including Iran.
Chinese leaders must make a delicate calculation. The country could indeed increase oil imports from Iran to express dissatisfaction with the United States and diversify its supply of crude oil.
But that would be provocative and risk applying secondary sanctions to the big Chinese oil companies.
Otherwise, China could leave its imports from Iran unchanged, reduce them and ask for exemptions, or reduce them to zero.
The application of sanctions would prevent a further intensification of disputes with the United States. oil purchase options, reduce its security of supply, and risk upward pressure on oil prices.
China has so far matched US equities at every stage of the bilateral trade dispute, but has not sought to escalate the conflict. can try to avoid the provocation of increased imports of oil from Iran.
If the trade dispute between the United States and China continues to worsen, the sanctions policy could get entangled The broader strategic conflict between the two superpowers
[Related items]
– Could Saudi Arabia replace all barrels lost by Iranian sanctions? Reuters, July 9
– Why Trump is pressuring Saudi Arabia to lower oil prices, Reuters, July 5 (19659002) – The White House must choose between stiff sanctions against Iran and moderate prices of gasoline
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