State Department Leaves Door Open to Iran Oil Import Exemptions

(Bloomberg) -- The U.S. will grant waivers “on a case-by-case basis” so countries can buy Iranian oil after American sanctions are reimposed, a State Department official said, softening the Trump administration's stance as it seeks to isolate the Islamic Republic after quitting the Iran nuclear deal.

Brian Hook, the State Department's director of policy planning, said three times at a briefing Monday that the U.S. isn't “looking” to make any exceptions for countries that import Iranian oil after the Nov. 4 date the U.S. has set for when sanctions will snap back into place. But he suggested countries that are reducing oil imports from Iran could get relief.

“Our goal is to increase pressure on the Iranian regime by reducing to zero its revenue from crude oil sales,” said Hook, who has led Trump administration discussions with European allies on the sanctions. “We are prepared to work with countries that are reducing their imports on a case-by-case basis, but as with our other sanctions we are not looking to grant waivers or licenses.”

The drive to slash Iranian oil exports is part of the administration's strategy as it follows through on President Donald Trump's decision in May to back out of the 2015 nuclear accord, a move criticized by allies from Asia to Europe. Hook appeared to strike a more lenient tone than a another senior State Department official who emphasized to U.S. reporters last week that the U.S. wasn't predisposed to grant any waivers.

Surging Prices

Those remarks caused oil to surge more than 3.5 percent in New York and provoked consternation in China and India, which do a significant amount of oil business with Iran. Hook said the U.S. is working with oil producers and consumers to ensure market stability.

On Saturday, Trump tweeted that Saudi Arabia had agreed to raise production by as much as 2 million barrels a day, although the White House later backpedaled from his assertion. With disruptions in Libya, coupled with ongoing supply losses in Venezuela and Angola, oil prices at their highest in more than three years.

“We are working to minimize disruptions to the global market, but we are confident that there is sufficient global spare oil production capacity,” Hook said.

More than 50 companies have already announced their intention to leave the Iranian market, Hook said, adding that the U.S. wanted to maximize pressure to get the country's leaders to end what the U.S. sees as malign activity such as funding terrorism and aligning itself with the regime of Syrian leader Bashar al-Assad.

Iran exported about 2.4 million barrels a day of crude oil in May, with Asia buying about two-thirds of the total and Europe the rest, according to the International Energy Agency. Iranian exports dropped to about 1-to-1.5 million barrels a day during the 2013-2015 period of strong U.S. and European economic sanctions.

To contact the reporter on this story: Nick Wadhams in Washington at nwadhams@bloomberg.net

To contact the editors responsible for this story: Bill Faries at wfaries@bloomberg.net, Joe Sobczyk, Larry Liebert

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