China and India, the largest and second-largest buyers of Iranian oil, are likely to defy US sanctions and by continuing imports from the Islamic Republic, arguing there are not sufficient supplies worldwide to replace Iranian crude.
China is unequivocal about wanting to uphold the Iran nuclear deal, formally the Joint Comprehensive Plan of Action (JCPOA), after the US pulled out in May. That includes continuing oil purchases past the November 5 start date of the new US sanctions against the Iranian oil industry.
President Donald Trump has warned that companies doing business with Iran will "not be doing business with the United States," putting countries over a barrel and imperiling the 2015 nuclear accord.
"The question you raised [about continuing oil purchases from Iran] boils down to whether we should continue to implement JCPOA," Chinese Foreign Ministry spokeswoman Hua Chunying told reporters last week. "China's position in this regard has been made very clear."
The power of Washington's sanctions threat comes in large part from the overwhelming US influence on the global financial system. For instance, world commodities are usually priced and traded in US dollars. The sanctions would prohibit companies from dollar-based transactions with Iran for oil sales.
European and Chinese diplomats have discussed establishing a "special purpose vehicle," or an SPV, designed to sidestep US sanctions and allow businesses to trade with Iran without using the dollar.
China, which imports Iranian oil worth 1.5 billion dollars every month, has already launched oil futures contracts denominated in Chinese yuan, as part of its broader effort to push for the use of its currency in international oil trade.
Iran is a strategic partner in China’s Belt and Road Initiative, which aims to create trade and infrastructure routes across Eurasia and Africa.
India, Iran’s second biggest oil customer after China, is walking a narrower diplomatic tightrope as New Delhi has traditionally close relations with Tehran and Washington.
Analysts say India is likely to flout the sanctions given its massive energy needs. New Delhi has shared its concerns with Washington and pushed for waivers.
India is particularly vulnerable since it imports 80 percent of its oil needs. Iran is India’s third biggest oil supplier, importing around 20 million tons of crude oil from Iran annually, equivalent to around 10 percent of its total needs.
Although there was an increase in imports of Iranian crude between April and September – more than two million tons a month – the actual volume could drop to 1.5 million tons in October, experts say, since private refiners like Mumbai-based Reliance Industries have stopped buying Iranian oil.
"The Iran issue led to significant increases in crude oil prices which have already hit emerging market economies like India. We cannot cut volumes from our largest suppliers to zero and source it from elsewhere. The reductions will take time," said Amit Bhandari, an analyst who specializes on energy at the Gateway House think tank.
Bhandari predicted that private companies will try to cut out Iranian oil entirely for fear of being penalized by the US. But state-owned refiners, who have greater government support, will likely continue the imports.
In recent talks with US special envoy on Iran, Brian Hook, Indian interlocutors conveyed that the "price of crude oil is a matter of concern for the domestic economy and directly impacts the common man," Kumar said.
India's official stance is that it does not recognize sanctions which are not imposed by the United Nations. But since US sanctions bar trade and payments to Iran in US dollars, New Delhi is also trying to evolve other payment mechanisms to buy Iran’s oil, including a barter in rice.
South Korea has asked the United States for "maximum flexibility" on its request for a waiver to prevent South Korean companies from being affected by renewed US sanctions against Iran, the Foreign Ministry said.
Foreign Minister Kang Kyung-wha asked for the exemption in a telephone call with US Secretary of State Mike Pompeo late on Monday, the ministry said in a statement.
"Minister Kang requested the US side to exert maximum flexibility so that South Korea can secure an exemption to minimize the damage to our companies," the ministry said.
Pompeo said he noted Seoul's position and would continue discussions on the matter, the ministry said.
South Korea and Japan have been in talks with the United States in a bid to avoid adverse impacts from the reimposition of US sanctions on Iran. Both countries won waivers during the previous round of sanctions that ended in 2016, but Washington has adopted a more aggressive stance this time.
South Korean buyers of Iranian oil have cut their purchases in recent months due to expensive Middle East grades and uncertainty over trade with Iran. Imports of Iranian oil fell to zero in September for the first time since 2012.
Another risk for South Korean companies is that sanctions will make it difficult to receive and make payments in dollars for projects linked to Iran.
DPA and Reuters contributed to this story.