Just How Low Can Iran’s Oil Exports Go?

Mae Love
September 23, 2018

South Korea, Japan, and India are all negotiating waivers, but until they receive clarity on the issue, South Korea and Japan are not risking sanctions in case they won't get exemptions.

As the USA deadline to halt crude oil import from Iran looms ahead, India is reportedly in talks with the European Union for an alternative channel for making payments to Tehran for buying petroleum products.

After a meeting with India's most senior politicians earlier this month, U.S. Secretary of State Mike Pompeo said that the United States would consider waivers "where appropriate", but reiterated that the United States eventually expects to bring Iranian oil exports to zero. One is how much of Iran's oil China, India, and Europe will buy in October and then in November, when the sanctions kick in.

The Iranian government's response includes a plan that hadn out electronic vouchers to about ten million underprivileged Iranians to be used for "fair distribution" of rationed essential goods at subsidised prices.

France and Germany, two European countries which are still part of the 2015 nuclear deal with Iran are working out a payment mechanism that will not include the US dollar in financial transactions with Tehran.

Previous proposals by Europe could not provide enough guarantees for the sale of Iran's oil to Europe or to help Iran access to the worldwide financial market, said Qasemi.

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Earlier this year, US President Donald Trump announced new sanctions against the country after the withdrawal of an worldwide nuclear deal with Iran.

The EU has been discussing with India that it was in the process of coming out with a payment solution as using United States dollars for oil purchase will be restrained post-November 4 when the USA sanctions come into force.

India has also been hoping that the U.S. will give it some relief from the sanctions. Oil refiners such as state-owned Indian Oil Corp (IOC) and Mangalore Refinery and Petrochemicals (MRPL) could use UCO Bank or IDBI Bank to route oil payments to Iran, the official added. Some sanctions took effect from August 6 while those affecting the oil and banking sectors will start from November 4.

However, despite its actions, Washington will not succeed in stopping Iranian oil exports, experts say, nevertheless, the decline will be felt as the Iran's economic crisis worsens. Payment for oil bought in September would be due in November as Iran provides a 60 days credit period.

Iran now has only Managalore Refinery and Petrochemicals Ltd, and International Olympic Committee as their major clients in India after Chennai Petroleum reduced the oil proceedings.

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