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India Among Eight Countries Allowed to Buy Iranian Oil as US Sanctions Come Into Force

India, the world's third-biggest oil consumer, meets more than 80 per cent of its oil needs through imports. Iran is its third-largest supplier after Iraq and Saudi Arabia and meets about 10 per cent of total needs.

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Updated:November 5, 2018, 11:51 PM IST
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India Among Eight Countries Allowed to Buy Iranian Oil as US Sanctions Come Into Force
A gas flare on an oil production platform in the Soroush oil fields is seen alongside an Iranian flag in the Persian Gulf, Iran. (Reuters/Representative image)
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Washington: India, China and Japan are among eight countries temporarily allowed to continue buying Iranian oil as the United States on Monday snapped to choke off the Islamic republic's oil and shipping industries.

US secretary of state Mike Pompeo said the waivers were granted to the eight nations as they showed "significant reduction" in oil purchase from the Persian Gulf country after the US reimposed crippling sanctions on Tehran.

"We have decided to issue temporary allotments to a handful of countries responsible to specific circumstances and to ensure a well-supplied oil market. The US will be granting these exemptions to China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey," Pompeo told reporters.

He vowed that the US will be "relentless" in pressuring Iran and said each of those countries has already demonstrated "significant reductions of the purchase of Iranian crude over the past six months."

Two of those eight have already completely ended imports of Iranian crude and will not resume as long as the sanctions regime remains in place, he said. "We continue negotiations to get all of the nations to zero," he said.

Over 20 importing nations have zeroed out their imports of crude oil already, taking more than 1 million barrels of crude per day off the market. The Iranian regime to date since May has lost over USD 2.5 billion in oil revenue, he said.

Additionally, today, 100 per cent of the revenue Iran receives from the sale of oil will be held in foreign accounts. Iran can only use this money for humanitarian trade or bilateral non-sanctioned goods, he asserted.

The US on Monday imposed "the toughest ever" sanctions on a defiant Iran aimed at altering the Iranian regime's "behaviour". The sanctions cover Iran's banking and energy sectors and reinstate penalties for countries and companies in Europe, Asia and elsewhere that do not halt Iranian oil imports.

While the US had previously wanted countries including India to completely halt oil purchases from Iran by November 4, it seems to have relented considering the havoc the move to completely take out Iranian supplies from the market would have had on prices.

India, the world's third-biggest oil consumer, meets more than 80 per cent of its oil needs through imports. Iran is its third-largest supplier after Iraq and Saudi Arabia and meets about 10 per cent of total needs. Currently, India pays its third largest oil supplier in euros using European banking channels.

India has resisted Washington's call to reduce purchases to zero, citing the galloping energy needs of its 1.3 billion people. But at the same time, India has taken steps to reduce its oil purchase from Iran, which has already declined substantially.

In May, President Donald Trump pulled the US out of the 2015 landmark Joint Comprehensive Plan of Action (JCPOA) terming it as disastrous". Under the Obama-era deal, involving five permanent members of the UN Security Council and Germany, Iran agreed to stop its nuclear programme in exchange for relief from economic sanctions.

After the US' withdrawal from the deal, Trump signed fresh sanctions against Iran, which claims its nuclear programme is peaceful and for civilian purpose.

Pompeo said the US has decided to grant narrow and temporary waivers to permit the continuation of three non-proliferation projects currently underway.

"Allowing these activities to continue for the time being will improve ongoing oversight of Iran's civil nuclear programme and make these facilities less susceptible to illicit and illegal nuclear uses. Rest assured, Iran will never come close to getting a nuclear weapon on President Trump's watch," he said.

Joining the press conference, Treasury Secretary Steven Mnuchin said that by taking such measures, the US is executing on the final actions to withdraw on the Obama administration's fatally flawed Iran deal.

"This is part of a maximum unprecedented economic pressure campaign the US is waging against the world's largest state sponsor of terror," he said.

On Monday, Treasury announced sanctions against more than 700 individuals, entities, aircraft and vessels as part of its largest ever single-day action targeting Iran. Over 300 of those sanctions are new targets.

"In addition, we are relisting hundreds of individuals and entities that were previously granted sanctions relief under the JCPOA," he said.

Mnuchin said the Iranian regime has funnelled billions of dollars for the Islamic Revolutionary Guard Corps force through the banking sector. "Today's designation includes 50 Iranian banks and their foreign and domestic subsidiaries, in conjunction with Iran's regime support for international terrorism, proliferation of mass destruction or their means of delivery, and human rights abuses," he said.

The latest US actions include the identification of more than 400 targets, including over 200 persons and vessels in Iran's shipping and energy sector; Iran Air, the national airline of Iran, and more than 65 aircraft; the placement of nearly 250 persons in associate block properties on the Specially Designated Nationals List; the Atomic Energy Organisation of Iran.

Combined with the previous actions, more than 900 Iran-related targets have been sanctioned under this administration in less than two years, marking the highest-ever level of US economic pressure on Iran, he said.

"We are making it abundantly clear to the Iranian regime that they will face mounting financial isolation until they fundamentally change their destabilising behaviour," Mnuchin said. Responding to questions, Mnuchin said the US expects European Union to honour the sanctions.
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