WASHINGTON - The Trump administration won’t renew the waivers that let countries buy Iranian crude oil without facing U.S. sanctions, according to four people familiar with the matter, a move that could roil energy markets and risks upsetting major importers such as India and China.
Secretary of State Michael Pompeo will announce the decision on Monday morning, said the people, who asked not to be identified discussing a plan that hasn’t been formally unveiled. The current set of waivers — issued to China, India, Japan, South Korea, Italy, Greece, Turkey and Taiwan — expire on May 2.
The administration also will announce commitments from other suppliers, including Saudi Arabia and the United Arab Emirates, that will offset the loss of Iranian crude on the market, according to two of the people.
It was not immediately clear how the move would affect Japan, but Japanese refineries put a halt on imports of Iranian oil late last month after buying 15.3 million barrels between January and March ahead of the expiry of the temporary waiver, according to industry sources and data on Refinitiv Eikon. Japanese refiners had wanted to ensure enough time for all cargoes already loaded to arrive in Japan and for payments to be completed.
The decision not to renew the waivers is a victory for national security adviser John Bolton and his allies who had argued that U.S. promises to get tough on Iran were meaningless with waivers still in place. Pompeo and his team had been more cautious, though they also had argued that the market was well-enough supplied to ramp up the pressure on Iran.
“The maximum pressure campaign could not be maximalist until the administration cut off Iran’s oil exports,” said Mark Dubowitz, the chief executive officer of the Foundation for Defense of Democracies and a supporter of additional sanctions on Iran. “With this decision, Iran’s economy will be under severe pressure as its hard currency earnings dry up and its foreign exchange reserves plummet.”
The State Department declined to comment on Sunday night. One of the people said that President Donald Trump had briefed Saudi Arabia’s Crown Prince Mohammed Bin Salman and United Arab Emirates Crown Prince Mohammed Bin Zayed on the decision in phone calls in the last few days. The U.S. decision was reported earlier by The Washington Post.
Trump withdrew from the 2015 nuclear deal between Iran and world powers almost a year ago and revived a range of sanctions against Iran and any countries doing business with the Islamic Republic. But he and his top advisers have been wary of roiling energy markets — and spurring a hike in prices at the pump in the U.S. For that reason, they allowed waivers for Iran’s biggest buyers of crude, including China, India and Turkey.
One of the people said that some of the countries that had previously received waivers would be given a little more time to wind down purchases. The person described that not as a waiver but more as a brief grace period.
Bolton and officials in the Energy Department argue that it’s time for the administration to make good on its desire to push Iran’s oil exports to zero. Pompeo’s team, led by Iran special representative Brian Hook, cautioned that a sudden removal of Iranian crude from the market — about 1.1 million barrels a day — could fuel volatility and lead to a price spike.
“We certainly aren’t looking to grant any exceptions or waivers,” Hook said in an interview this month with Kevin Cirilli on Bloomberg Radio’s “Sound On.” Oil markets are better supplied this year than last, and that “puts us in a better position to accelerate the path to zero,” he said.
The risk now is the decision could spike crude prices just as Trump begins to gear up to campaign for a second term. His administration had been wary of doing anything that could push crude prices above $70 a barrel, but as of Friday, the price of Brent was at $72.
The administration had also faced growing pressure from Iran hawks in the Senate, including Sens. Ted Cruz and Tom Cotton, to cut waivers to zero. Some senators had threatened to hold up administration nominees if the waivers stayed in place and argued that continuing to grant exemptions would be a direct contradiction of the Trump administration’s decision to leave the Iran deal.