Iran: US will fail to cut crude exports to zero
US President Donald Trump has decided to eliminate all waivers issued to eight economies allowing them to buy Iranian oil without facing American sanctions, the White House said on Monday, while vowing to ensure global oil market was well supplied.
“The United States, Saudi Arabia and the United Arab Emirates ... along with our friends and allies, are committed to ensuring that global oil markets remain adequately supplied,” the White House said.
Oil prices rose following the announcement. International benchmark Brent rose 2.6 percent to $73.87 a barrel after earlier touching $74.31, highest since early November. US crude futures gained 2.4 percent, or $1.52 a barrel, to $65.52. It earlier touched a high of $65.87, a level not seen since late October.
Ritterbusch and Associates, an oil trading advisory firm, said in a morning note that “a complete elimination of Iranian exports is nearly impossible and that a reduction beyond current levels will likely prove limited.”
The United States reimposed sanctions in November on exports of Iranian oil after Trump unilaterally pulled out of a 2015 nuclear accord between Iran and six world powers.
Along with sanctions, Washington granted waivers to eight economies that had reduced their purchases of Iranian oil, allowing them to continue buying it without incurring sanctions for six more months. They were China, India, Japan, South Korea, Taiwan, Turkey, Italy and Greece.
"We're going to zero. We're going to zero across the board," US Secretary of State Mike Pompeo told reporters after the White House made the announcement in a statement. "There are no (oil) waivers that extend beyond that period, full stop," he said, adding that there will be no grace period for those economies to comply their waivers end on May 2.
The White House said on Monday that the US, Saudi Arabia and the United Arab Emirates "have agreed to take timely action to assure that global demand is met as all Iranian oil is removed from the market".
Saudi Arabia and UAE have assured the US they will ensure the market has an “appropriate supply,” Pompeo said. He said the suppliers have been working directly with Iran’s customers to make the transition away from Iranian barrels less disruptive.
Saudi Energy Minister Khalid a-Falih said in a statement that the kingdom is closely monitoring the oil market and "will coordinate with fellow oil producers to ensure adequate supplies are available to consumers while ensuring the global oil market does not go out of balance".
“In the next few weeks, the kingdom will be consulting closely with other producing countries and key oil consuming nations to ensure a well-balanced and stable oil market, for the benefits of producers and consumers as well as the stability of the world economy,” Falih said in a statement.
Following Washington’s official announcement, Trump tweeted that Saudi Arabia and other OPEC members will “more than make up” for any drop in Iranian supplies.
The Iranian Oil Ministry said on Monday the United States will fail to cut Iranian oil exports to zero, as Iran is ready for any US decision to end waivers.
“Whether the waivers continue or not, Iran’s oil exports will not be zero under any circumstances unless Iranian authorities decide to stop oil exports ... and this is not relevant now,” Tasnim quoted the unnamed “informed source” as saying.
“We have been monitoring and analyzing all possible scenarios and conditions for the advance of our country’s oil exports, and necessary measures have been taken ... Iran is not waiting for America’s decision or the lack of it to export its oil,” the news agency quoted the source as saying.” We have years of experience in neutralizing efforts by enemies to strike blows against our country,” the source added.
Dialing up pressure on Iran also threatens to spark maritime conflict in the Persian Gulf. Iran has long threatened to shut down the Strait of Hormuz, the world’s busiest transit lane for seaborne oil shipments, if it is prevented from exporting oil.
“According to international law, the Strait of Hormuz is a marine passageway and if we are barred from using it, we will shut it down,” Fars quoted General Alireza Tangsiri as saying on Monday
“In case of any threat, we will have not even an iota of doubt to protect and defend the Iranian waters,” Tangsiri added.
Opposition to US policy
Iran’s two largest customers, China and India, have continued buying oil under the waivers, as have three American allies or partners: South Korea, Japan and Turkey.
China’s Foreign Ministry on Monday denounced Washington’s Iran policy.
“China opposes the unilateral sanctions and so-called ‘long-arm jurisdictions’ imposed by the US. Our cooperation with Iran is open, transparent, lawful and legitimate, thus it should be respected,” Foreign Ministry spokesperson Geng Shuang told reporters.
“Our government is committed to upholding the legitimate rights and interests of Chinese companies and will play a positive and constructive role in upholding the stability of global energy market.”
CNBC, Reuters, and AP contributed to this story