US Reinstates Sanctions On Iran; Eight Waivers To Be Announced Shortly

Roughly six months after President Trump declared his intentions to reimpose sanctions on Iran over vague allegations that the Iranians hadn't fulfilled their obligations under the JCPOA (the Joint Comprehensive Plan of Action, otherwise known as the Iran deal), the US formally reimposed sanctions on Iran at midnight.

The sanctions will impact more than 700 "individuals, entities, vessels and aircraft", according to the White House. These include Iranian banks, oil companies and shipping firms. Treasury Secretary Steven Mnuchin has said the US is "intent on ensuring that global funds stop flowing to the coffers of the Iranian regime," while the White House has said it's "open" to renegotiating a deal. Meanwhile, the administration has opted to allow Iran to remain connected to US-dominated international payments network SWIFT - for now, at least.

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Secretary of State Michael Pompeo is scheduled to announce the list of eight countries that will get temporary waivers to keep importing Iranian oil at 8:30 a.m. Washington time on Monday. Japan, India and South Korea are among the countries expected to receive a waiver.

The waivers prompted conservative U.S. critics of the administration’s approach - including Republican Senators Marco Rubio and Ted Cruz - to say the White House was caving in on its tough line and to vow legislation to close what they consider loopholes.

Here's a roundup of which countries are expected to receive waivers (text courtesy of Reuters):

  • South Korea said on Monday it had been granted a waiver to continue at least temporarily importing condensate from Iran and running financial transactions with the Middle Eastern country. Condensate - a super-light crude oil - is a critical feedstock for South Korea’s petrochemical industry. South Korea, a U.S. ally and one of Asia’s biggest buyers of Iranian oil, asked Washington for “maximum flexibility” last week, after some of its construction firms canceled energy-related contracts in the Islamic Republic due to financing difficulties.
  • Japan said on Monday it was in close communication with the United States on the measures, although Chief Cabinet Secretary Yoshihide Suga declined to provide details.
  • India’s oil minister Dharmendra Pradhan confirmed on Saturday that the country, Iran’s top oil client after China, had won a waiver from the U.S. sanctions after a ‘forceful campaign’ by prime minister Narendra Modi. 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.
  • China is also seeking waivers, although it remained unclear on Monday what volumes, if any, it would be allowed to purchase. The Chinese Foreign Ministry reiterated its objections to sanctions, but would not directly say whether China had been granted an exemption.
  • Turkish Trade Minister Ruhsar Pekcan said on Saturday that Turkey had received indications that it would be among the countries granted a waiver, but was still awaiting clarification on Monday.

Though while some have characterized the Trump administration's decision to grant these waivers as a capitulation, for now at least, Trump is having his cake while eating it, too. Oil prices have reversed their 'panic' rally, with Brent crude falling 15% off the highs, while Iran's economy remains stuck in a devastating rut (the country's currency, the Iranian rial, has shed more than 70% of its value against the dollar this year).

Though Iran has pledged to ignore the sanctions, their impact is already apparent: Iranian crude exports peaked at 2.8 million barrels per day in April, including 300,000 barrels per day of condensate, but have fallen to 1.8 million barrels per day since then.