Published: Sat, May 12, 2018
Health Care | By Belinda Paul

Buyers seek USA waivers to buy Iranian oil amid new sanctions

Buyers seek USA waivers to buy Iranian oil amid new sanctions

China is the world's largest importer of Iranian crude, at an average of 648,000 bpd, and its oil demand is sharply rising.

The United States plans to impose new sanctions against Iran, which produces around 4 percent of global oil supplies, after abandoning an agreement reached in late 2015 that curbed Tehran's nuclear activities in exchange for removing U.S. -Europe sanctions.

The reapplication of USA sanctions - particularly if effective - likely marks the practical end of the supply cut agreement as OPEC operates through unanimous decision-making, and Saudi and Iranian oil market interests will grow increasingly divergent.

Under the deal reached in 2015 between Iran and six major powers, Tehran agreed to curb its nuclear programme in return for lifting most global sanctions that crippled the country's economy.

People are guessing right now at the moment the oil production in Iran is 3,8 million barrels a day, that was the output in March; and the export is between 2 and 2,5 million barrels a day.

As part of the supply deal, OPEC pledged to cut 1.2 million bpd from supplies from its members.

Analysts have also pointed out that rising gas prices could deplete money saved by the average American due to the tax overhaul bill passed late past year by Trump and Republicans in Congress.

People are guessing that the sanctions would reduce oil exports from Iran between 200,000 up to 1 million.

Iranian oil exports are expected to decline over time, while prospects for foreign investment in its energy sector will be diminished, in turn placing pressure on the Middle Eastern country's oil-dependent economy, Kiernan said. Japan may follow suit.

Under the new sanctions, the United States will begin blocking new deals with Iran immediately, but will provide leniency toward firms with existing commercial agreements if they demonstrate that they are reducing their involvement with Iran over a 180-day "wind-down" period.

Outside OPEC, soaring USA crude oil production could help to fill Iran's supply gap.

Several US military officials told CNN that there are increasing concerns Iran is on the cusp of an attack against Israel. "Oil prices will certainly move up, and $90-100 per barrel prices may again be on the cards", Fesharaki said.

By around 8.20 a.m. BST (3.20 a.m. ET) Brent crude, the global oil benchmark, was up 0.4% to trade at $77.66 per barrel, reaching a high not seen since November 2014. These sanctions will be far less effective than those imposed in 2012, with their success or failure largely outside of USA control.

And Chinese refiners say there are alternative suppliers, including Russia, Saudi Arabia and exporters in West Africa. The effects may be muted as major Asian importers, China chief among them, are likely to continue buying Iranian oil.

During the last round of sanctions, India enjoyed waivers allowing limited Iranian oil imports paid for in rupees instead of USA dollars. Any short-term spike in the oil price in response to the curtailment of Iranian imports is likely to provide higher revenues to actors like Russian Federation.

The global oil market is finely balanced, with top exporter Saudi Arabia and No.1 producer Russian Federation having led efforts to curb oil supply to prop up prices.

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