(Persia Digest) - Brent crude had risen to $85 a barrel last month but fell gradually to about $73 as the market expected the US to exempt major buyers of Iranian crude to keep importing for some time, reports the Economic Times of India.
The US has allowed India and seven other countries to temporarily keep buying Iranian crude oil despite sanctions against Tehran, calming fears of a possible jump in fuel prices if supplies from the Opec country were completely choked.
Top buyers of Iranian crude India and China, along with South Korea, Japan, Italy, Turkey, Greece and Taiwan were exempted from sanctions, which the US has re-imposed, US secretary of state Mike Pompeo said on Monday. He warned those without a waiver of “swift, severe penalties” for engaging in trade with the Islamic republic.
Last Thursday, ET was the first to report that India and the US had reached a broad understanding that would allow New Delhi to keep buying Iranian crude oil, although at lower levels than last year.
There wasn’t much information on how much and for how long each country could import oil from Iran. Continued import would mainly benefit state refiners such as Indian OilNSE -2.46 % and Mangalore Refinery and Petrochemicals, the biggest importer of Iranian oil.
Any supply disruption due to Iran sanctions was never India’s concern. The government, however, had been seriously worried about prices, which was zooming on fears that the Iran sanction would take away serious supply out of the market. An international price spike had kept local fuel prices at record levels for months, triggering public frustration, which could turn into a big political liability for the ruling party in an election year.
Brent crude had risen to $85 a barrel last month but fell gradually to about $73 as the market expected the US to exempt major buyers of Iranian crude to keep importing for some time. On Monday, Brent crude gained about a dollar to touch $73.92 a barrel.
Vowing “swift, severe penalties” to those caught violating sanctions, Pompeo said the US pressure campaign has cost Iran $2.5 billion in oil revenue since May. Pompeo said the waivers were only temporary measures to ease their transition from Iranian crude and avoid destabilising the energy market. But Iranian leadership, which vowed to fight sanctions on Monday, saw this as a victory for their country.
“That the US is forced to exempt eight nations from sanctions on oil sales, when it had previously said it wants to cut Iran’s oil sales to zero, isn’t that a sign of Iran’s victory and the US backing off,” Iran President Hassan Rouhani said. The sanctions cover 50 Iranian banks and subsidiaries, more than 200 people and vessels in its shipping sector, and targets Tehran’s national airline, Iran Air, and more than 65 of its aircraft, the statement said.
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