Published: Mon, April 22, 2019
Markets | By Otis Pena

USA oil sanctions anger Asian powers

USA oil sanctions anger Asian powers

The Trump administration on Monday told five nations, including allies Japan, South Korea and Turkey, that they will no longer be exempt from US sanctions if they continue to import oil from Iran.

Washington, however, granted Iran's eight main buyers of oil, mostly in Asia, waivers to the sanctions which allowed them limited purchases for six months. "Our goal has been to get countries to cease importing Iranian oil altogether". "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.

The US put the sanctions back on Iranian oil exports after President Donald Trump unilaterally pulled out of a 2015 nuclear accord between Iran and six world powers.

"Should Iran's sanction waivers indeed be lifted, that could boost oil prices towards the $80 per barrel mark", said Han Tan, analyst at futures brokerage FXTM.

USA officials told reporters the Trump administration will inform other governments they no longer will be exempt from sanctions.

Axios reported on Sunday that Mike Pompeo, US secretary of state, met last week "with around 15 Iranian-American community leaders" in Texas.

The sanctions were imposed as Washington pressed Iran to curtail its nuclear program and stop backing militant proxies across the Middle East.

The White House announced that sanctions waivers for China, India, Japan, South Korea and Turkey would not be renewed when they expired on 2 May.

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"We will no longer grant any exemptions", Pompeo said.

"Today we are announcing the United States will not issue any additional Significant Reduction Exceptions to existing importers of Iranian oil".

While Saudi Arabia is expected to boost output again, analysts fear the USA move - along with sanctions on Venezuela's oil industry - will leave the world with inadequate spare capacity. Global benchmark Brent rose 2.6 per cent to $73.87 a barrel after earlier touching $74.31, highest since early November.

President Donald Trump said in a tweet that "Saudi Arabia and others in OPEC will more than make up the Oil Flow difference in our now Full Sanctions on Iranian Oil".

The prospect of reduced Iranian supply brought a cautious reaction from top OPEC exporter Saudi Arabia, a key USA ally and also a driving force behind the OPEC-led supply-cut deal.

Japan and South Korea, two of the U.S.'s closest allies and long-time buyers of Iranian oil, said they were aware of the reports about the waivers but didn't confirm the decision.

"We will continue to apply maximum pressure on the Iranian regime until its leaders change their destructive behaviour [and] respect the rights of the Iranian people", he said.

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