The knowns and unknowns of US Iran oil sanction waivers

US President Donald Trump and Iran's President Hassan Rouhani. Photograph:( Reuters )

Reuters United States Nov 08, 2018, 04.41 PM (IST)

The United States on Monday re-imposed sanctions against Iran's oil exports to punish Tehran for its involvement in several Middle Eastern conflicts.

Washington had been pushing governments to cut imports of Iranian oil to zero. But, fearing a price spike, it granted Iran's biggest buyers - China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey - sanctions waivers.

That will allow the eight, which account for about 75 per cent of all Iran's oil exports, according to trade data, to import at least some oil for another 180 days.

Washington and the recipients of the waivers have not disclosed how much oil they are allowed to import, or under what conditions deals can still be made.

Analysts have estimated the overall volumes allowed under the waivers at between 700,000 and 1.7 million barrels per day (bpd) compared with a peak of around 3 million bpd in Iranian crude and condensate exports in mid-2018.

JP Morgan said "the lack or difficulty in acquiring shipping insurance will help in reducing exports quickly as they did during last international sanctions."

The US bank also said "payments for the oil by the exempt countries must go into escrow accounts in their local currency" and that this "means the money won't directly go to Iran and it can only be used to buy certain non-sanctioned goods from its crude export customers."

Once the waivers expire after 180 days, new waivers are expected to be issued, with a source in China saying his country would likely receive another six months of exemptions, though at a lower rate of around 220,000 bpd.

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That will allow the eight, which account for about 75 per cent of all Iran's oil exports, according to trade data, to import at least some oil for another 180 days.