WASHINGTON: US President Donald Trump moved on Monday to cut Iranian oil exports to zero by ending eight countries’ exemption from US sanctions on buyers of crude from Tehran.
China, India, Japan, South Korea, Taiwan, Turkey, Italy and Greece will now be subject to full US economic penalties if they buy oil from Iran after May 2.
Secretary of State Mike Pompeo said the US wanted to deprive Iran of its lifeline of $50 billion in annual oil revenues by halting all exports. “We are going to zero. We’re going to zero across the board,” he said.
“We’ve made clear — if you don’t abide by this, there will be sanctions. We intend to enforce the sanctions.”
The aim was to pressure Tehran to curtail its nuclear program, halt ballistic missile tests and end its regional meddling in Syria, Yemen and elsewhere. “The Trump administration and our allies are determined to sustain and expand the maximum economic pressure campaign against Iran to end the regime’s destabilizing activity threatening the United States, our partners and allies, and security in the Middle East,” the White House said.
The US said it was working with Saudi Arabia and the UAE to ensure the oil market was “adequately supplied.” Pompeo said he was confident of Riyadh’s commitment to making sure there was sufficient supply in the market, and Trump said Saudi Arabia would “more than make up” for the absence of Iranian oil.
Saudi Energy Minister Khalid Al-Falih said the Kingdom was “monitoring oil market developments” and would coordinate with other producers to ensure a balanced market. Brent crude rose to more than $74 a barrel on Monday, the highest since November.
Saudi Arabia produces about 9.8 million barrels of oil per day but has the capacity for 12 million, so it could increase production to address any market shortfall, Faisal Mrza, a Saudi-based energy and oil marketing adviser, told Arab News.
“As the world energy industry’s only safety valve, Saudi Arabia is the only oil producer that can compensate for the loss of Iranian barrels,” he said.
“Historically, Saudi Arabia has successfully proven its ability to maintain balance in the global markets, absorbing any supply shock caused by geopolitical or technical factors.”