The United States announced on Monday that it will not renew exemptions granted last year to buyers of Iranian oil.
It demanded that buyers stop purchases by May 1 or face sanctions, a move to choke off Tehran’s oil revenues which sent crude prices to six-month highs on fears of a potential supply crunch.
The US reimposed sanctions in November on exports of Iranian oil after US President Donald Trump last spring unilaterally pulled out of a 2015 accord between Iran and six world powers to curb Tehran’s nuclear program. Eight economies, including China and India, were granted waivers for six months, and several had expected those exemptions to be renewed.
The waivers were issued in part to give those countries more time to find alternate energy sources but also to prevent a shock to global oil markets from the sudden removal of Iranian crude. Three of those waivers, for Greece, Italy and Taiwan, are no longer needed because they have all halted their imports of Iranian oil.
Iran’s oil exports have dropped to about 1 million barrels per day (bpd) from more than 2.5 million bpd prior to the re-imposition of sanctions.
US Secretary of State Mike Pompeo, in a briefing Monday, said “we’re going to zero across the board,” saying the United States had no plans for a grace period for compliance beyond May 1.
The White House intends to deprive Iran of its lifeline of $50 billion in annual oil revenues, Pompeo said, as it pressures Tehran to curtail its nuclear program, ballistic missile tests and support for conflicts in Syria and Yemen.
The White House said it was working with top oil exporters Saudi Arabia and the United Arab Emirates to ensure the market was “adequately supplied.”
Saudi Energy Minister Khalid Al-Falih said in a statement that his country would work with other oil producers "to ensure adequate supplies are available to consumers while ensuring the global oil market does not go out of balance."
OPEC is next scheduled to meet in June.
Turkish Foreign Minister Mevlut Cavusoglu criticized the US decision, saying it "will not serve regional peace and stability."
In a message posted on Twitter Monday, Cavusoglu said: "Turkey rejects unilateral sanctions and impositions on how to conduct relations with neighbors."
China, one of Iran's largest customers, slammed the step, calling it more evidence of US "unilateral sanctions and long-arm jurisdiction." China, which relies on imports for about half of its oil, could present the toughest diplomatic challenge for the US in trying to enforce its sanctions.
South Korea’s Yonhap news agency quoted the Foreign Ministry as saying the South Korean government had been negotiating with the United States at all levels to extend the waivers and that it would continue to make every effort to reflect Seoul’s position until the May deadline.
In India, refiners have started a search for alternative supplies but the government declined to comment officially.
A spokesman for the Japanese embassy in Washington said Tokyo was not planning to comment on the decision but Japanese officials say the Iran issue was discussed at a meeting between the Japanese foreign minister and Pompeo last Friday.
Israel's Prime Minister Benjamin Netanyahu, meanwhile, praised the administration for further tightening sanctions enforcement on Iran. He said the move "is of great importance for increasing pressure on the Iranian terrorist regime."
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