US takes hardline approach on Iran; tells India to completely halt oil purchase

The bigger question is how China and India will react. Geng Shuang, China Foreign Ministry spokesman, said China’s cooperation with Iran is open, transparent, reasonable and legitimate, and should be respected. China was allowed to import 360,000 bpd under US waivers, while India was permitted 300,000 bpd.

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HIGHLIGHTS:

The US National Security Advisor John Bolton has been pushing for ‘maximum pressure’ to make the countries – China, India, South Korea, Japan, Taiwan, Italy, Greece and Turkey fall in line.

The loss of Iranian oil will no doubt be hard to replace. But Washington is confident that its Gulf allies will cover that gap.

Through this, the Trump administration is working towards crippling the Iranian government and weaken the power of its ruling clerics, with Pompeo saying that Iran has earned about $50 billion annually from oil sales.

The US had convinced Saudi Arabia and the UAE to ramp up production to offset the outages.


Taking a hardline approach, the United States will not be extending waivers to India and seven other countries to bring a complete halt to their purchases of oil from Iran. If they fail to abide, they would be hit by tougher US sanctions.

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The National Security Advisor John Bolton has been pushing for ‘maximum pressure’ to make the countries – China, India, South Korea, Japan, Taiwan, Italy, Greece and Turkey fall in line.

Italy, Greece and Taiwan have already zeroed out their purchases of Iranian oil. Turkey, South Korea and Japan will have to scramble to find alternatives, potentially at higher costs.

The bigger question is how China and India will react. Geng Shuang, Foreign Ministry spokesman, said China’s cooperation with Iran is open, transparent, reasonable and legitimate, and should be respected. China was allowed to import 360,000 bpd under US waivers, while India was permitted 300,000 bpd.

The loss of Iranian oil will no doubt be hard to replace. But Washington is confident that its Gulf allies will cover that gap. However, it is unclear whether Saudi Arabia will preemptively increase production to compensate for hypothetical supply losses from Iran. Saudi Arabia, an avowed enemy of Iran, has been coordinating with Russia in recent years to manage global oil prices.

A senior State Department official said    the policy of zero Iranian imports originated with Secretary Mike Pompeo hoping to downplay the differences between high-level officials. He has executed this policy in tight coordination with the president on every step of the way. Pompeo said the US will no longer grant exemptions. The current sanctions waivers expires on May 2. This clears the way for American economic penalties against all companies or financial institutions that continue to take part in transactions linked to buying Iranian oil. Through this, the Trump administration is working towards crippling the Iranian government and weaken the power of its ruling clerics, with Pompeo saying that Iran has earned about $50 billion annually from oil sales.

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Following US’s stance, oil prices shot up, spiking by more than two per cent. However, Trump’s administration dismissed concerns about the impact on the oil market, arguing that global supply exceeds demand and also that the US had convinced Saudi Arabia and the UAE to ramp up production to offset the outages. But it is clear that the market was caught off the guard. An analyst said this does bring a lot more uncertainty in terms of global supplies. The global head of energy analysis at the Oil Price Information Service, Tom Kloza said that a gallon of oil didn’t go above $3 last summer. “But this summer, if we don’t have Iranian oil, we probably do go over $3.”

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US takes hardline approach on Iran; tells India to completely halt oil purchase
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The bigger question is how China and India will react. Geng Shuang, China Foreign Ministry spokesman, said China’s cooperation with Iran is open, transparent, reasonable and legitimate, and should be respected. China was allowed to import 360,000 bpd under US waivers, while India was permitted 300,000 bpd.
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The Policy Times