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Global Geopolitical Series: U.S. officially announces end to sanctions waiver for Iranian oil imports

Last November, when the United States re-imposed sanctions on Iran and its oil imports, it granted six months Significant Reduction Exceptions (SRE), better known as the sanctions waiver to several countries including China and India, which accounts for more than 50 percent of oil imports from Iran, in exchange for a promise to significantly reduce the oil imported from Iran.

After weekend speculation, which pushed the oil price significantly higher in the International market, when trading opened on Monday, the Trump administration officially announced later in the day that it plans to not renew the waivers when it expires early next month. Brent crude jumped more than 3.2 percent, while North American benchmark WTI was higher by 2.8 percent. WTI is currently trading at $65.8 per barrel and Brent at $7.5 per barrel premium to WTI.

Here is the official statement from the White House announcing an end to sanctions waiver and measures taken by the United States to counter Iran and its oil imports, https://www.whitehouse.gov/briefings-statements/president-donald-j-trump-working-bring-irans-oil-exports-zero/

In the statement, the White House announced that the three big producers (U.S., Saudi Arabia, and UAE) are working closely to ensure that the oil market remains well supplied despite efforts to bring down Iran’s oil exports to zero. However, both Saudi Arabia and the United Arab Emirates are reducing their oil production in line with the production agreement reached between OPEC and Russia-led Non-OPEC countries to reduce global supplies by 1.2 million barrels per day.

Hence it would be interesting to see the levels of production of the above two countries in months to come. It also remains to be seen whether the United States succeeds in bringing down Iran’s oil imports without the support from the European Union, which still remains in favor of continuing with the Joint Comprehensive Plan of Action (JCPoA), better known as the Iran nuclear accord, which was agreed between Iran and six world powers (United States, United Kingdom, Germany, France, China, and Russia) under President Barrack Obama but exited by the Trump administration.

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