Despite sanctions, US may allow India to continue buying Iran oil

Secretary of State Mike Pompeo said that countries like India, if it gets the exemption, would be asked to bring down their oil imports from Iran to zero in six months' time.

The US has agreed to temporarily allow eight countries to continue buying Iranian oil after it re-imposes crippling sanctions on Tehran on November 5, Secretary of State Mike Pompeo said on Friday, citing "significant reductions" in imports of oil from the Persian Gulf nation.

India is one of the countries expected to get the exemptions.

But senior administration officials refused to spell out the names on Friday.

The list of these exemptions would be announced on Monday, Pompeo told reporters during a conference call on Iranian sanctions, with US Treasury Secretary Steven Mnuchin.

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

Pompeo said that countries like India, if it gets the exemption, would be asked to bring down their oil imports from Iran to zero in six months' time.

Negotiations are still ongoing, he said explaining the reasons for not revealing the names of the countries that are expected to get exemptions from the US from this latest and so far the toughest American sanctions on Iran.

"We expect to issue some temporary allotments to eight jurisdictions, but only because they have demonstrated significant reductions in their crude oil and cooperation on many other fronts and have made important moves towards getting to zero crude oil importation.

“These negotiations are still ongoing. Two of the jurisdictions will completely end imports as part of their agreements.

“The other six will import at greatly reduced levels," Pompeo said.

These economic sanctions are just a part of the US government's total effort to change the behaviour of the Iranian regime, he said.

"On November 5th, the United States will re-impose sanctions that were lifted as part of the nuclear deal on Iran's energy, shipbuilding, shipping and banking sectors. These sanctions hit at core areas of Iran's economy. They are necessary to spur changes we seek on the part of the regime," he said.

"In order to maximise the effect of the President's pressure campaign, we have worked closely with other countries to cut off Iranian oil exports as much as possible," Pompeo said.

The expected list of exemptions to eight jurisdictions, that too temporary, is far less than the 20 countries, including India, which were exempted from Iranian sanctions during the previous Obama administration, he said.

"We will have issued, if our negotiations are completed, eight and have made it clear that they are temporary," he said.

"Not only did we decide to grant many fewer exemptions, but we demanded much more serious concessions from these jurisdictions before agreeing to allow them to temporarily continue to import Iranian crude oil.

“These concessions are critical to ensure that we increase our maximum pressure campaign and accelerate towards zero," Pompeo said.

As a result of the latest sanctions, he said the US expects to have reduced Iranian crude oil exports by more than 1 million barrels even before these sanctions go into effect.

"This massive reduction since May of last year is three to five times more than what many analysts were projecting when President Trump announced our withdrawal from the deal back in May," he said.

"Starting today, Iran will have zero oil revenue to spend on any of these things. Let me say that again: Zero.

“100 per cent of the revenue that Iran receives from the sale of crude oil will be held in foreign accounts and can be used by Iran only for humanitarian trade or bilateral trade in non-sanctioned goods and services," he said.

Pompeo said the latest US sanctions are targeted at the regime, not the people of Iran who have suffered grievously under this regime.

"It's why we have and will maintain many humanitarian exemptions to our sanctions, including food, agriculture commodities, medicine and medical devices," he said.

India, which is the second biggest purchaser of Iranian oil after China, is willing to restrict its monthly purchase to 1.25 million tonnes or 15 million tonnes in a year (300,000 barrels per day), down from 22.6 million tonnes (452,000 barrels per day) bought in 2017-18 financial year, sources in New Delhi said.

The US will also demand the Society for Worldwide Interbank Financial Telecommunication (SWIFT) global financial network stop supporting Iranian banks as part of enforcing sanctions over Tehran's nuclear programme and alleged support for terrorism.

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 and warned countries against any cooperation with Tehran over its controversial nuclear weapons programme.

Iran has dismissed these charges and maintains that its nuclear programme is for peaceful purposes.

Photograph: Thomas Peter/Reuters