A glance at the policies adopted by Iran’s major oil customers towards their future crude imports from the country shows that, except South Korea, they have turned a blind eye to threats by US President Donald Trump and are continuing their purchases from Tehran.
This comes despite US pressures on them to halt imports from Iran while in less than a month (on November 4) the second round of unilateral US sanctions on Iran will kick in.
Time is proving US calculations to reduce Iran’s oil exports to zero to be incorrect. On May 8, the Trump administration pulled the US out of the Joint Comprehensive Plan of Action (JCPOA), signed in July 2015 between Tehran and P5+1, and announced that Iran oil customers must completely cut their imports from the Middle Eastern state by November 4.
Trump has repeatedly warned that once the sanctions take effect, any noncompliance by customers of Iran’s oil will lead to serious consequences.
Nevertheless, concurrent with the US announcing its plan to stop Iran’s oil exports, experts underlined the ineffectiveness of such a policy as they maintained that in addition to global markets’ incapability to fill the supply void the absence of Iran’s oil would create, the country’s major customers will not be able to completely halt their imports from the Middle Eastern state.
A glance at international developments over the past few weeks confirms that the global market is not yet prepared for the absence of Iran’s crude and the country’s customers are still seeking waivers from Washington’s unilateral sanctions.
Faced with a the huge wave of international criticism leveled against it, and having realized that its plot to eliminate Iran from the international energy market is doomed to failure, Washington is gradually revising its sanctions policy and granting exemptions to Tehran’s major customers.
An October 9 report by the Washington Free Beacon said the Trump administration is open to allowing some countries to continue importing Iranian oil, despite promises to tighten the screws on Tehran and any country that continues doing business with the Islamic Republic.
It said this is according to US officials who confirmed that some nations may get a temporary pass from a cadre of new sanctions set to be imposed next month.
The report added the latest concessions come amid a widening battle in the Trump administration over the severity of new sanctions set to be imposed on Iran early next month.
“While top officials in the Trump administration, including President Trump himself, have vowed to crack down on global business dealings with Iran, some officials have been working to lessen the severity of these sanctions through waivers and other concessions.”
China, Iran’s biggest oil customer, imports more than 600,000 barrels of crude from the Middle Eastern state per day. During the pre-JCPOA era, when Iran was under severe international sanctions, China used to buy 40 percent of the country’s total oil exports. The East Asian state increased its crude imports from Iran following the signing of the JCPOA.
Despite pressures by the US during the past few months, China has announced that it will not stop importing oil from Iran. Chinese firms have even increased their use of Iranian oil tankers to guarantee that they will not halt imports from the country.
India, the second major customer of Iran’s oil, has also resisted US pressures and expressed hope that it would be able to obtain exemptions from the sanctions.
India has announced that it plans to import nine million barrels of oil from Iran in November, when US sanctions on Iran are expected to go into force.
Earlier, Indian Oil Minister Dharmendra Pradhan said New Delhi is in talks with all related officials to obtain exemptions from sanctions on Tehran.
In addition, the Rhum gas field, located in the North Sea, is jointly shared by Iran and the UK. Since the field supplies around five percent of Britain’s gas demand, the continuation of gas extraction from it is essential to the UK.
The Rhum field – about 240 miles northeast of Aberdeen, off Shetland – is co-owned by the National Iranian Oil Company (NIOC). BP is also a partner but its stake is in the process of being sold to Serica Energy.
As per the US sanctions on Iran’s oil sector and the NIOC, activities in this field are required to be suspended by November 4. However, the UK’s pressure forced the US to back down on its plan to include the field in its sanctions list.
On October 9, Reuters wrote that Washington had granted BP and Serica Energy a new license to run the gas filed, in a rare exemption by the Trump’s administration.
Moreover, in the post-JCPOA era Europeans purchased 40 percent of Iran’s overseas sales of oil. Although certain European firms have announced that they would stop imports from Iran, the EU and Iran are in the final stages of activating a mechanism known as the Special Purpose Vehicle (SPV) to facilitate payments related to Iran’s exports – including oil – and imports, so long as the firms involved were carrying out legitimate business under EU law.
Japan, one of top five importers of Iran’s oil, is still purchasing crude from Tehran. It has even increased imports from Iran in the past few months.
Turkey has also reacted negatively to US excessive demands and calls for suspending imports from Iran, saying Ankara is not compelled to abide by Washington’s decisions.
Turkish officials have announced that, despite US sanctions, they will remain committed to their oil and gas contracts with Iran, as they only think of safeguarding Turkey’s interests.
In addition, reports show that South Korea, which has already stopped oil imports from Iran, is in negotiations with the US to gain exemptions from sanctions on Tehran. Seoul has so far held several rounds of talks with the US to this end.