Iran hails oil-for-goods deal with South Korea

Washington unilaterally reimposed a crippling oil embargo on Iran last month following its withdrawal in May from a landmark 2015 nuclear deal. (File/AFP)
Updated 01 December 2018
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Iran hails oil-for-goods deal with South Korea

  • South Korea has cut Iranian oil purchases to zero from an estimated 285,000 barrels per day in the first six months of the year
  • South Korea is Iran’s third largest trade partner after China and the United Arab Emirates

TEHRAN: Iran said Saturday it had finalized a deal with South Korea to trade oil for goods, skirting renewed US sanctions.
“A mechanism has been devised for returning oil export revenues from South Korea, by which Iran’s oil export revenue will be bartered with imported goods,” Hossein Tanhayi, head of the Iran-South Korea chamber of commerce, told state news agency IRNA.
Washington unilaterally reimposed a crippling oil embargo on Iran last month following its withdrawal in May from a landmark 2015 nuclear deal.
South Korea — a close political ally of the United States — has cut Iranian oil purchases to zero from an estimated 285,000 barrels per day in the first six months of the year, according to Bloomberg figures.
The sanctions also target Iran’s banking sector and its ability to bring dollars into the country, but leave open the possibility of trade in goods.
Tanhayi did not give details of the mechanism, but said a “joint fund” could be opened between their respective central banks.
South Korea is Iran’s third largest trade partner after China and the United Arab Emirates.
Bilateral trade has dropped from $12 billion in 2017 to $5.7 for the first 10 months of 2018, according to the chamber of commerce.


Oil prices near 2019 highs after US ends all Iran sanction exemptions

Updated 29 min 40 sec ago
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Oil prices near 2019 highs after US ends all Iran sanction exemptions

  • Iran’s main oil buyers initially received sanction exemptions
  • US reiterates its goal to cut Iran oil exports to zero

SINGAPORE: Oil prices were near 2019 highs on Tuesday after Washington announced all Iran sanction waivers would end by May, pressuring importers to stop buying from Tehran.
Brent crude futures were at $74.40 per barrel at 0239 GMT, up 0.5 percent from their last close and not far off a 2019 peak of $74.52 reached on Monday.
US West Texas Intermediate (WTI) crude futures hit their highest level since October 2018 at $65.95 per barrel before edging back to $65.89 by 0239 GMT, which was still up 0.5 percent from their last settlement.
The United States on Monday demanded that buyers of Iranian oil stop purchases by May 1 or face sanctions, ending six months of waivers which allowed Iran’s eight biggest buyers, most of them in Asia, to continue importing limited volumes.
Before the reimposition of sanctions last year, Iran was the fourth-largest producer among the Organization of the Petroleum Exporting Countries (OPEC) at almost 3 million barrels per day (bpd), but April exports have shrunk well below 1 million bpd, according to ship tracking and analyst data in Refinitiv.
Barclay’s bank said in a note following the announcement that the decision took many market participants by surprise and that the move would “lead to a significant tightening of oil markets.”
The British bank added that Washington’s target to cut Iran oil exports to zero posed a “material upside risk to our current $70 per barrel average price forecast for Brent this year, compared with the year-to-date average of $65 per barrel.”
ANZ bank said in a note on Tuesday that “the decision is likely to worsen the ongoing supply woes being felt with Venezuelan sanctions, the OPEC supply cut, and intensifying conflict in Libya.”
The move to tighten Iran sanctions comes amid other sanctions Washington has placed on Venezuela’s oil exports and also as producer club OPEC has led supply cuts since the start of the year aimed at tightening global oil markets and propping up crude prices.
Ellen Wald, non-resident senior fellow at the Global Energy Center of the Atlantic Council, said the United States “seem to expect” Saudi Arabia and the United Arab Emirates to replace the Iranian oil, but she added “that this is not necessarily the way Saudi Arabia sees it.”
Saudi Arabia is the world’s biggest exporter of crude oil and OPEC’s de-facto leader. The group is set to meet in June to discuss its output policy.
“Should OPEC decide to end their supply cut program going into the second half of the year, this could limit oil’s upside in the coming months,” said Lukman Otunuga, analyst at futures brokerage FXTM.
Meanwhile, the Atlantic Council said the US move would hurt Iranian citizens.
“We’re going to see their currency collapse more, more unemployment, more inflation,” said Barbara Slavin, director for the Future of Iran Initiative at the Atlantic Council, adding that the US sanctions were “not going to bring Iran back to the (nuclear) negotiating table.”