Why US granted Iran sanction waivers to 8 countries?

Oil&Gas Materials 7 November 2018 12:47 (UTC +04:00)

Baku, Azerbaijan, Nov.7

By Leman Zeynalova – Trend:

The softening of the US Administration's position on Iran sanction waivers is partly the result of the worries concerning world oil supply and demand, Francis Perrin, Senior Fellow at the OCP Policy Center (Rabat) and Senior Research Fellow at the French Institute for International and Strategic Affairs (IRIS, Paris), told Trend.

“D-Day has arrived on 5 November with the reestablishment of all US sanctions against Iran announced by President Trump last May. Between March-April 2018 and October Iranian crude oil exports fell by about 1 million barrels per day to 1.5 million b/d, which means a reduction of 40 percent. It is very likely that there will be another fall in November-December. It is a very harsh blow for Iran as oil exports represent about 70-80 percent of its export revenues,” noted the expert.

He believes that oil exports will not fall to zero as hoped in Washington but it will not be easy for Tehran to export more than 1 million b/d of crude in 2019.

“Waivers were awarded to eight countries, five in Asia (China, India, Japan, South Korea and Taiwan) and three in Europe (Turkey, Italy and Greece). The Trump Administration wants to severely weaken Iran without creating an oil shortage and without pushing oil prices upwards, which is clearly a very difficult task,” said Perrin.

So far so good for the US as Iranian oil exports and production are down, world oil supply meets oil demand and oil prices are significantly lower than one month ago, noted the expert.

“That being said there remains some risks for the oil market and oil prices in the coming weeks and months as we have to add to Iran the decline of Venezuela's oil production, high political and security risks in countries such as Libya and Nigeria and a growing world oil demand. The oil market is in balance today but there is no absolute guarantee that it will always be the case. The softening of the US Administration's position on waivers is partly the result of these worries concerning world oil supply and demand,” he added.

The US government's sanctions against Iran came into effect on Nov.5. The sanctions are designed to target Iranian oil exports and the country's financial sector.

The sanctions are aimed at dissuading third countries from doing business with Iran.


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