US to end sanctions waivers for Iranian oil imports

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01:48 mins.

End of Iran oil waivers in sight

The United States has said no governments will be exempted from US sanctions on Iranian oil imports. The White House said the decision was intended "to bring Iran's oil exports to zero."

The United States on Monday announced it will not extend sanctions exemptions to countries importing oil from Iran when they expire in early May.

Eight governments — India, China, Turkey, Greece, Italy, Japan, South Korea and Taiwan — had been given 6-month reprieves from the unilateral US sanctions on Iran.

"This decision is intended to bring Iran's oil exports to zero, denying the regime its principal source of revenue," the White House said in a statement.

"The Trump administration and our allies are determined to sustain and expand the maximum economic pressure campaign against Iran to end the regime's destabilizing activity threatening the United States, our partners and allies and security in the Middle East," it said.

Read more: Iran sanctions: 5 things to know

India has warm ties with Washington despite disagreeing with the US view that Iran is a threat, but the decision may exacerbate tensions with China and Turkey. Greece, Italy, Japan, South Korea and Taiwan have already substantially reduced their purchases from Iran.

Trump last year withdrew the US from the Iran nuclear deal negotiated by his predecessor, Barack Obama, as well as the leaders of China, France, Germany and the UK, which saw Iran massively scale back its nuclear program in return for the lifting of sanctions.

Trump decided to reinstate sanctions on Tehran, which led Germany, France and the UK to set up a new transaction channel that would allow companies to continue trading with Iran.

Read more: What is the EU-Iran payment vehicle INSTEX?

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01:02 mins.
Business | 22.04.2019

US increases pressure on Iranian oil, triggering oil price...

Oil prices rise

Oil prices rose following the announcement. In morning trading, benchmark US crude surged by 2.4% to $65.57 (€58.23) per barrel in New York. Brent crude, used to price international oils, jumped by 2.6% to $73.80.

The White House said that Saudi Arabia and the United Arab Emirates, both close US allies that back US President Donald Trump's stance against regional rival Iran, would make up the difference in oil to ensure that global markets were not unsettled.

"Saudi Arabia and others in OPEC [Organization of Petroleum Exporting Countries] will more than make up the oil flow difference in our now full sanctions on Iranian Oil," Trump wrote on Twitter.

Riyadh was committed to its mission to "stabilize" the oil market, Saudi Energy Minister Khalid al-Falih said Monday.

"The kingdom will coordinate with other oil producing countries to ensure adequate supplies to consumers," he said in a statement.

Read more: How the EU plans to get around US sanctions on Iran

Iran claims sanctions 'illegal'

Following the US announcement, Iran described the sanctions as "illegal."

"Since the sanctions in question are principally illegal, the Islamic Republic of Iran did not and does not attach any value or credibility to the waivers," the Foreign Ministry said on its official website.

Turkey also said it would not respect the sanctions on oil imports from Iran. "We do not accept unilateral sanctions and impositions on the issue of how we will establish relations with our neighbours," Foreign Minister Mevlut Cavusoglu was quoted as saying by the state news agency Anadolu.

Cavusoglu warned that the US move to end exemptions "will not serve regional peace and stability."

Israeli Prime Minister Benjamin Netanyahu praised the decision. "The decision by President Trump and the US administration is of great importance to increase the pressure on the Iranian terrorist regime," Netanyahu said in a statement.

"We stand by the determination of the US against Iranian aggression and this is the right way to stop it," he said.

Iran is Israel's archenemy, and Netanyahu has fully supported the Trump administration's aggressive stance against Tehran.

Trump has continually expressed his support for Israel after making the controversial decision to recognize Jerusalem as Israel's capital in December 2017.

Hit hard by sinking oil prices

A great, big hangover

Even Norway isn't immune to the falling price of oil. For years, the wealthy Scandinavian nation had fueled its rapid growth with the oil it pumped out of the North Sea. But what once transformed a poor agrarian state into one of the richest countries in the world now has policymakers wondering if it wouldn't be wiser to allocate more resources to Norway's fishing industry.

Hit hard by sinking oil prices

Double trouble

For Russia, the falling price of oil has added insult to injury as its economy is already reeling under Western sanctions. In 2015, economic output in the country shrunk by around 4 percent. As a result, salaries have dropped and the ruble has lost half of its value against the dollar. The news service Bloomberg estimates that 2016 will be another recessionary year for Russia.

Hit hard by sinking oil prices

An uncertain future

Nigeria is Africa's largest producer of oil. Before being elected president, Muhammadu Buhari announced that he would increase government spending - but the drop in the price of oil may make that promise impossible to fulfill. The World Bank estimates that three-quarters of the Nigerian state's revenues come from the oil business. Many infrastructure projects are currently on hold.

An infographic revealing how much a barrel of oil needs to cost for oil-exporting nations to turn a profit.

Hit hard by sinking oil prices

New realities

Nigeria's not the only country that calculates its budget based on the price of oil staying high. The result has been a big gap between expected and actual revenues. The price for a barrel of oil has dropped by nearly 75 percent since mid-2014. Many experts currently have little reason to believe the per-barrel price will return to its old level of $120 (110.76 euros) anytime soon.

Hit hard by sinking oil prices

After sanctions

Now that sanctions against Iranian exporters have been lifted, the Islamic Republic plans to ramp up its oil production by half a million barrels a day - putting further pressure on an already oversupplied energy market. Iran, for its part, blames its archrival Saudi Arabia for falling oil prices.

Hit hard by sinking oil prices

Less giving, more taking

Saudi Arabia has refused to curb oil output in order to protect its market share from competition from the US fracking industry and Iran. But now, even the world's largest oil exporter is starting to get a taste of its own medicine. The International Monetary Fund is warning about a massive impending budget deficit. The Saudis want to introduce taxes and slash energy and food subsidies.

Hit hard by sinking oil prices

How long will reserves last?

Like their Saudi counterparts, other oil-rich Gulf statessuch as Qatar, Oman and the United Arab Emirates are also watching their energy reserves dwindle. These regional powers all boast large sovereign wealth funds - but altogether, the six Gulf states have already accumulated a budget deficit worth $260 billion (239.8 billion euros), according to estimates by JP Morgan Chase.

Hit hard by sinking oil prices

Winds of change in Venezuela?

Venezuela has the largest oil reserves in the world. For years, the country's socialist government used revenues from the sale of oil to fund its lavish social programs. Now, President Nicolas Maduro has declared a state of emergency for the Venezuelan economy. Popular support for the successor to Hugo Chavez has been slipping for about a year - about as quickly as the price of oil has dropped.

Hit hard by sinking oil prices

What now?

Thanks to a boost in shale gas extraction, aka fracking, the US is now the world's largest energy producer. Low oil prices, however, have made fracking widely unprofitable. The US is also one of the largest consumers of energy in the world. While motorists may celebrate having to spend less money at the pump, bigger, gas-guzzling vehicles are gaining in popularity - bad news for the environment.

law/ng (AFP, AP, Reuters)

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