Oil prices down on Iran sanction waivers and demand concerns

Randal Sanchez
November 7, 2018

The US sanctions herald the end of Washington's involvement in the landmark 2015 deal signed between Iran, the US and other world powers, which was created to curb Iran's nuclear ambitions.

"Here we have a situation where an agreement created to stop Iran acquiring nuclear weapons has been complied with by Iran, an agreement struck in good faith, and it's been torn up by one party. We are standing up to a bullying enemy", said Iranian President Hassan Rouhani.

In a statement, US Treasury Secretary Steven Mnuchin said the move "should make clear to the Iranian regime that they will face mounting financial isolation and economic stagnation until they fundamentally change their destabilizing behaviour".

In a statement issued over the weekend, the Kremlin's foreign ministry "strongly condemned" the new wave of US sanctions, arguing that the move deals "another powerful blow to the Nuclear Nonproliferation Treaty (NPT)".

"The US has said they want to cut Iran's oil sale to zero, but we said you can't and they have not succeeded".

"It would be up to the judgment of private firms, but based on this decision, the (Japanese) companies would likely prepare for resuming Iran crude imports", Seko told reporters.

The designated targets include 50 Iranian banks and their subsidiaries, over 200 persons and vessels in Iran's shipping and energy sectors, one Iranian airline and more than 65 of its aircraft, according to the statement.

US President Donald Trump withdrew from the 2015 nuclear deal in May and gave nations and businesses 180 days to wind down their oil purchases to "zero".

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Hedge fund managers were net sellers of petroleum-linked futures and options for a fifth week running last week as concerns about sanctions on Iran evaporated and investors refocused on economic worries.

He said the United States policy is to levy "maximum economic pressure" on the country.

To keep the deal alive, the remaining parties to the Iran accord are trying to maintain trade with Tehran, despite skepticism that this is possible. India hopes to continue to buy about 1.25 million tonnes of oil a month until the end of the fiscal year to March 31, unchanged from November's level, a government official said. Eight countries got exemptions for six months on importing Iranian oil: China, India, South Korea, Turkey, Italy, Greece, Japan, and Taiwan.

FALLING EXPORTS Iran said it would ignore the sanctions.

South Korea, the world's fifth-biggest crude oil buyer, mainly imports an ultralight form of crude oil, condensate, from Iran, which accounts for 74 percent of its oil purchases from that country.

Iranian Foreign Minister Mohammad Javad Zarif said U.S. Under the Obama-era deal, involving five permanent members of the UN Security Council and Germany, Iran had agreed to stop its nuclear programme in exchange for relief from economic sanctions.

"Exempting eight countries from the USA sanctions means Iranian oil will continue to flow and there's no longer risk of a supply shortage", he said.

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