The U.S. government has agreed to let eight countries, including allies South Korea and Japan, as well as India, keep buying Iranian oil after it reimposes sanctions on Tehran next week, Bloomberg informs, citing a U.S. official.
Iran’s biggest oil customers, all in Asia, have been seeking sanctions waivers to allow them to continue buying some of its oil and have argued that a total ban would spur a further rally in the price of crude.
Bloomberg reported on Friday that South Korea and Japan had received waivers along with India, which relies heavily on Iranian supplies. A list of all countries getting waivers was expected to be released officially on Monday.
“Eight is much higher than anybody expected … Despite the tough talk, the issuance of so many waivers provides a lifeline to Iran,” Olivier Jakob from Petromatrix consultancy told Reuters.
Washington is imposing new sanctions from Monday on Iran’s oil industry after Washington withdrew from a nuclear deal between Tehran and other global powers earlier this year.
But the move has backfired on U.S. President Donald Trump as it led to a steep rally in oil prices, including the cost of gasoline, ahead of U.S. mid-term elections.
It was unclear how much crude those eight countries would be allowed to buy from Iran, whose crude oil exports have plummeted from an average of more than 2.5 million barrels per day to around 1.5 million bpd in recent weeks.
In addition to crude, Iran is also exporting some 0.5-1.0 million bpd of gas condensate and buyers would also need to apply for U.S. waivers to continue imports.
Goldman Sachs said it expected Iran’s crude exports to fall to 1.15 million bpd by the end of the year. During a previous round of sanctions at the start of the decade, Iranian oil exports declined at times to below 1 million bpd excluding condensate.
Tehran said on Friday the report on waivers showed that the market needed the country’s crude. “The waivers granted to these eight countries show that the market needs Iran’s oil and it cannot be pulled out of the market … I don’t know whether these waivers are permanent or temporary,” Iran’s Deputy Oil Minister Ali Kardor said, according to state television.
Oil prices LCOc1 rallied this year to a four-year high above $85 per barrel on fears Washington may want to cut Iranian oil exports to zero.
But the rally petered out in recent weeks amid market fears about a slowing global economy and as expectations grew that Iran would still be allowed to export significant amounts, Reuters adds.
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